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Kenneth Baerenklau and Kurt Schwabe

Kenneth Baerenklau
Associate Professor of Environmental Economics and Policy
Associate Provost
Kurt Schwabe
Professor of Environmental Economics and Policy
Kurt Schwabe and Kenneth Baerenklau
The Economics of Water Scarcity
With a lack of groundwater in the Central Valley and the snowpack in the Sierra Nevada at an all-time low, California’s governor has implemented historic, mandatory water restrictions to address the prolonged drought. While it is important not to invest in reduction strategies blindly, California policymakers must quickly take action to implement long-term solutions that will ensure we get the return we need for a safe and reliable water supply.

In the hub of the Southern California Metropolitan Water District system, UCR is strategically located to help inform local, regional and state policy makers of efficient ways to manage water. Kenneth Baerenklau and Kurt Schwabe, environmental economists in UCR’s new School of Public Policy, specialize in issues critical to water policy, quality and scarcity, advising water agency managers on information campaigns, tiered-pricing models, supply and reuse options, and technology-based rebate programs. Their continued partnership will further establish innovative conservation policies and efforts to better understand their effects.

Areas of Expertise

Areas of Expertise:
  • Water scarcity and conservation
  • Water policy
  • Tiered water rates
  • Water Economics
College: Affiliations:

Kenneth Barenklau

Kurt Schwabe

Press Release/Article: Profile:

Select Honors and Distinctions

Kenneth Barenklau

  • Outstanding Dissertation Award (Honorable Mention), American Agricultural Economics Association, 2003
  • Outstanding Dissertation Award, Department of Agricultural & Applied Economics, University of Wisconsin - Madison, 2003
  • Wisconsin Agricultural and Life Sciences Alumni Association Travel Fellowship, University of Wisconsin - Madison, 2001
  • Vilas Professional Development Fellowship, University of Wisconsin - Madison, 1999 and 2001
  • Science to Achieve Results Fellowship, United States Environmental Protection Agency, 1998-2001
  • Wisconsin Alumni Research Foundation Fellowship, University of Wisconsin - Madison, 1996-1997
  • Shell Foundation Fellowship, Department of Civil Engineering, Stanford University, 1993

Kurt Schwabe

  • Kenneth R. Keller Research Award for Excellence in Doctoral Research. North Carolina State University, 1996.
  • Best Teaching Practices Award Recipient. Center for Teaching Excellence. Ohio University, 1998
  • Editor's Citation for Excellence in Manuscript Review Award. Journal of Environmental Quality. 2002
  • 2002 Outstanding Journal Article Award for "Microeconomics of Irrigation with Saline Water," (with I. Kan and K. Knapp). Journal of Agricultural and Resource Economics
  • Flagship Fellowship. Commonwealth Scientific and Industrial Research Organization. Australia. 2007-2008

Latest Research

Q&A

Q: Can you explain your research?
Kurt: My research essentially uses economics to look at the trade offs associated with different allocations of our environmental resources. Some of the work we’ve done more recently on water is related to the issue of allocation. But we’ve been focusing on pricing because pricing is a way to allocate resources across different uses –household, industry, agricultural, etc.

Ken: My research is focused on issues related to water, both in agriculture and urban settings. I’ve also worked on an area of environmental economics called market valuation. We use the tools of economics and statistics to place values on improvements in environmental quality and augmentation of natural resources.

Q: Can you explain what an environmental economist does?
Environmental economists use all types of economic theories and statistics to analyze problems of scarcity and environmental quality. They look at the implications of the different allocations of limited resources (such as water) in meeting unlimited demands.

Q: Why is this research needed?
California has a limited amount of water and we have an increasing demand. If we are smart about how we allocate water, it can go a long way. But if we are not smart about how we allocate it, it does not go as far and that becomes a constraint to growth, the wellbeing of California residents and the economy. Our research is mainly focused on utilizing water efficiently through pricing mechanisms and studies of how agriculture can utilize ground water over the long run. All these studies are related to efficient use of California water resources.

Q: How severe are water scarcity issues locally, nationally and globally?
The severity of the scarcity of water locally, nationally and globally varies both over time and over geography. There are times in California where we will have wet years or when we will have more dry years. Globally there are certain regions around the world that will continue to confront water scarcity every day. We are starting to see the effects of climate change. What we must do is plan for a future that is very different from what the past has been like. We don’t know exactly what the future will look like, but there will be reoccurring droughts that may be worse and last longer. The biggest challenge we face is trying to plan for this uncertain future.

Q: As California’s extreme drought continues, how is your research helping water agencies find ways to reduce per capita consumption that are cost-effective?
We worked with the Eastern Municipal Water District on a study where they switched from a uniform price structure, where consumers pay the same price for every unit consumed, to an allocation based rate structure. Allocation based rates are a form of block rate pricing where consumers pay a low price when they first start to consume water and as they keep consuming more the price jumps to a higher level. As they keep consuming, the price continues to increase. These blocks are personalized to individual households, where one household may get a lower price than another household because more people are living there, for example. What we’ve been able to show is that this type of rate structure is a very effective conservation tool. In the case of Eastern Municipal we think the rate structure was responsible for 10-15% reduction in demand. An equivalent drop in demand under a uniform rate structure would have required a 30% increase in price, but Eastern Municipal raised the price only 3% and got this 10-15% reduction. We were also able to build a water demand model for Eastern Municipal to show them how modifications to that rate structure would affect household level demand.