Equity-Driven Management of Essential Environmental Resources Under Price-Based Consumption

The global climate crisis and population growth restrict the availability of essential environmental resources such as water and energy and a solution for this situation remains elusive. If and when conditions become extreme, only the well-offs will have access to these valuable resources. With that in mind, we look for ways to achieve equity within societies while preserving, to the degree possible, natural resources. We suggest a method for setting differential pricing for each population stratum so that each spends a relatively similar percentage of their income on these basic commodities, without depleting valuable resources. Our method optimizes the prices while simultaneously estimating the unknown consumption–price relationship. We show the effectiveness of our method based on data from Israel and through extensive simulation experiments reflecting different levels of income inequality within societies, different consumption–price relations, and resource availability. Our study shows that equity and resource preservation can go hand-in-hand.