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IMPROVING NEW MEXICO’S WATER MANAGEMENT - page 19 / 47

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demands are an economic loss. In Albuquerque, water sells for approximately $1.59 per 1000g

per month. If consumers are forced to cut back, their willingness to pay for additional water

increases to $1.67. The consumer is willing to buy more water at the going price of $1.59 but

cannot because there is no additional water. The situation is what economists call an increase in

the implicit price of water. These prices are indicated in bold and italics next to the current

marginal price for each city. The change in willingness to pay times the amount of curtailment is

the economic loss that results from keeping the water supply constant in the context of increasing

population. Table 12 indicates the economic loss if each of the four cities cannot expand water

supplies.

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