The increase in water prices is a good attempt to reduce water usage in Singapore, but the authorities may not get the results they are hoping for (Water price must reflect scarcity, says PM Lee; March 26).
Demand for water is price inelastic. Increasing the price will not lead to a corresponding decrease in the demand.
A more effective approach would be to give incentives for reduced water usage, and impose a pay-per-use surcharge for excessive water usage.
For example, a household of four people could be allotted a certain amount of water a month; once their usage exceeds that, they could be charged, say, $5 for one litre, $10 for two litres, and so on.
This would be more effective in reducing water consumption, as it is more reasonable to be charged when they use excessive amounts of water.
Josephine Sitorus (Ms), 19,
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