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Thread: block rate

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    #1

    block rate

    ❶The law of demand states that people demand less of a good as it becomes more expensive.

    ❷In 1990, after three years of extremely low rainfall, prices shifted to a block rate: as water supplies dried up, prices were raised in price “blocks,” and consumption dropped by 50 percent. ❸After the drought ended, water use rose, but only to 62 percent of pre-drought levels.
    ❹“These prices permanently changed people’s habits and attitudes,” UC Berkeley economist David Zetland wrote of Santa Barbara. ❺“People change their behavior when the price of water increases.”
    ❻This theory was validated in Santa Barbara, California, when, during the drought of 1987-91, the city raised water prices to help reduce consumption. ❼Before the drought hit, Santa Barbara water was priced at a flat rate, meaning that the cost did not change when people used more water.
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    What does "
    block rate" mean here?

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    #2

    Re: block rate

    They mean there were different prices that increased as usage increased. For example, the first 5000 gallons might cost you x dollars per gallon. From 5-6 thousand the price is 1.1x and from 6-7 the cost is 1.25x, etc.

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