Ulric B. and Evelyn L. Bray Social Sciences Seminar

Abstract: A near-catastrophic drought in Cape Town, South Africa illustrates three potentially general implications of climate change for publicly provided utility services. First, the rich adapt more. Prior to the drought they use twice the piped water of poorer households. At the peak of the drought, they use less. Second, some of the adaptation comes from adoption of private substitutes, such as groundwater wells. This generates fiscal and environmental externalities, both of which persist after the drought abates. Third, aggressive policy interventions mitigate some of the regressive impacts of the drought in this context.