The Economics of Household Demand for Water: The Case of Kandy Municipality,Sri Lanka

This study estimates the demand for domestic water in a fast-growing city of a developing country. Monthly data for 40 randomly selected households for a six-year period were used for the estimation. There were three price hikes during the study period, which provided adequate variation in the prices for an econometric estimation. A log-log model was selected as a proper specification for the demand function. Marginal price, difference price, income, and household size were used as the independent variables. After correcting the data for auto-correlation and heteroscedasticity, the final model was estimated. Results show all the expected signs with statistical significance. Price elasticity (marginal) and income elasticity for water in the study area are estimated to be - 0.34 and 0.08, respectively. Thus, our findings confirm the previous findings that water is neither price- nor income-elastic. Given these responses, a price hike may not help conserve water in the study area. However, very low price responsiveness can be used to increase water revenues of the municipality.     

Residential Water Use: Efficiency, Affordability, and Price Elasticity

In practice, water pricing is the main economic instrument used to discourage the wasteful use of residential water. Owing to considerations of affordability, residential water is systematically underpriced because water is essential for life. Such a low price results in water being used inefficiently. This paper proposes a system that supplements the existing price system with a cap-and-trade measure to reconcile conflicts among the goals of residential water use. It forces all people (independent of income) to be faced with reasonable price signals and to use water efficiently. The poor could, however, gain from trade and afford water. By taking advantage of the agent-based model, a simulation of this system applied to Taipei, Taiwan shows that those with lower income per capita are better off under this system even though the equilibrium price of residential water is higher. The simulated average price elasticity of market demand is ?0.449.     

Simulating the Impact of Pricing Policies on Residential Water Demand: A Southern France Case Study

The case study conducted in this paper looks at residential water pricing from three different points of view. It first describes existing urban water-pricing practices in Southern France, emphasizing that pricing is not yet being used as a tool for providing economic incentives to save water. It then looks at the observed impact of pricing on water consumption, through an econometric analysis of a cross-sectional data set. The analysis suggests that demand, with an estimated price elasticity of −0.2, is not yet very responsive to price variation. A regional water model (300 municipalities) is then developed and used to simulate the potential impact of various water-pricing scenarios on aggregate water demand, aggregate water sales revenue, and consumer surpluses. The results illustrate the trade-offs that have to be made between the search for environmental effectiveness, cost recovery, and equity when implementing complex water-pricing structures such as block rates or seasonal water pricing.     

Regional Differences in the Price Elasticity of Residential Water Demand in Spain

This paper explores the influence of regional climate variability on the elasticity of price for residential water demand in Spain. The data comes from the Spanish Survey of Family Budget (INE 2012), a national based survey of household living conditions including more than 15,000 observations. The econometric analysis included other determinants of residential water demand in Spain such as income and household characteristics. In line with the broad literature, the demand for water in Spain is found to be inelastic, although price elasticity differs notably when accounting for different climatic regions in the territory. The results have noteworthy policy implications as water pricing is considered an efficient means of long term sustainable planning of water resources management. The results imply that policy makers may have reasons to explore differentiating the impacts of water efficiency measures by region.     

Estimating Residential Water Demand Using the Stone-Geary Functional Form: The Case of Sri Lanka

This paper formulates a demand model for residential water in Sri Lanka using the Stone-Geary functional form. This functional form considers water consumption to be composed of two parts—a fixed and a residual component. The presence of these two components means it is possible to estimate a threshold below which water consumption is non-responsive to price changes. In turn, this can provide policy makers with a better understanding of the degree to which price changes will affect water consumption and the extent to which price instruments can be utilised to raise additional revenues. These revenues could then be used to extend pipe-borne water infrastructure to a greater proportion of the population than is currently the case. The findings presented here show the portion of water use that is insensitive to price changes in Sri Lanka is between 0.64 and 1.06 m³ per capita per month. The results indicate that price elasticity ranges from -0.11 to -0.14 while income elasticity varies from 0.11 to 0.14. Combined, these findings suggest water authorities could raise revenue via price increases to fund critical infrastructure extension.     

Sensitivity of Water Price Elasticity Estimates to Different Data Aggregation Levels

The empirical literature on residential water demand employs various data aggregation methods, which depend on whether the aggregation is over consumption, sociodemographic variables, or both. In this study, we distinguish three dataset types—aggregated data, disaggregated data, and semi-aggregated data—to compare the consequences of using a large sample of semi-aggregated data vis-à-vis a small sample of fully disaggregated data on the water price elasticity estimates. We also analyze whether different aggregation levels in the sociodemographic variables affect the water price elasticity estimates when the number of observations is fixed. We employ a discrete-continuous choice model that considers that consumers face an increasing block price structure. Our results demonstrate that the water price elasticities depend upon the level of aggregation of the data used and the sample size. We also find that the water price elasticities are statistically different when comparing a large semi-aggregated sample with a small disaggregated sample.

     

An Econometric Analysis of Residential Water Demand in Cyprus

This paper analyses econometrically residential water demand in the three major urban areas of Cyprus, a semi-arid country with medium to high income levels. Water demand turns out to be inelastic, but not insensitive, to prices; price elasticity is less than unity in absolute terms, but significantly different from zero. The analysis further shows that periodic interruptions in household water supply, which were applied as an urgent water saving measure in 2008–2009, did not encourage water conservation among the population. The paper discusses these results, pointing at the need for appropriate water pricing policies and long-term planning in order to move towards sustainable water resource management.     

阶梯式计量水价在城市居民生活用水需求管理中的应用

基于计量经济模型,以北京市为例分析了水价对城市居民生活用水需求的影响,并进一步探讨了阶梯式计量水价在城市居民生活用水需求管理中的应用。     

Calculating Price Elasticity of Water Demand Using Gene Expression Programming Based on Economic,Social and Meteorological Variables

Determining the changing rate of water consumption through altering parameters such as water tariffs can help water companies select appropriate water policies. This paper is intended to find the proper relation between the water price elasticity of demand and some social, economic and climatic variables that are released annually by international organizations like the United Nations Development Program and the World Bank. By using genetic algorithm, different combinations of water price elasticity of demand and variables like gross domestic product, per capita gross domestic product, gross national income, precipitation, human development index, average temperature and household size have been analyzed. It was found that the absolute price elasticity of water demand has positive relationships with precipitation and price of water. It has also been found that the gross national income, average percent of consumers who have secondary education and human development index have a negative relation with the absolute price elasticity of water demand.

     

Water Pricing Under Joint Benefits

Abstract

A cubic functional form of an econometric model for residential water demand estimation is used in order to accommodate different price elasticities for different levels of water demand. Precise estimates of these different price elasticities offer a useful tool to water authorities for urban water demand management through price-based policies. Panel estimation methods (fixed and random effects) are employed to estimate model parameters. The results show that a cubic form of the demand equation can provide appropriate estimates of price elasticities for different “consumption groups” of residential customers. In addition, the effect of public awareness and information on water conservation is also evaluated after controlling other parameters affecting demand for water. Thus, another implication of this study is that well-informed consumers, aware of issues of water conservation and of techniques for water efficient use, may be more inclined to reduce their water consumption.     

南京市居民生活用水需求弹性分析

现阐述了南京居民生活需水量与水价、居民收入三者之间的关系；通过对数据处理建立水需求模型，计算出需水量与价格及收入的定量关系，分析了提高水价对水资源需求量的抑制作用。最后得出结论，在市民可以承受的价格范围内可适当提高水价来缓解水资源供需矛盾，提高用水效率。对需求的价格弹性的定量分析，是客观反映价格的重要方法，为确定合理的生活水价提供重要的参考依据。     

南水北调受水区城镇节水的定量研究

从城镇用水部门的用水机理出发,辨析出影响南水北调受水区城镇用水的主要因素.采用计量经济学方法,以历史系列数据为基础分别建立了城镇居民生活、第二产业、第三产业用水定额的需求函数.利用南水北调受水区41个地市水价与价格弹性的关系进行推演,得出该区域城镇生活用水、第二产业用水和第三产业用水价格弹性的拐点分别出现在-0.465、-0.54和-0.46处,拐点处水价分别为5.0元、6.9元和9.1元.结合经济发展预测,计算得出不同影响因素组合情景下受水区2015年的总需水量.结果表明,在3种可能的水价方案下,与水价不变的情景相比,受水区可分别实现节水9.72亿 m~3 、13.44亿 m~3 和15.64亿 m~3 ,节水效果明显.     

A framework for understanding energy for water

Abstract

This article offers a framework for understanding how energy is used to meet water demand in countries. Specifically, the relationships between energy use and water scarcity, the location of renewable water resources, and aggregate water demand are explored. The article also examines how policy options such as water price reforms, agriculture subsidies and crop elimination may influence the energy use and energy intensity of water withdrawals. Conclusions suggest that while policy options exist, certain uncontrollable factors such as severe water scarcity or substantial freshwater abundance limit the ability of some countries to significantly improve the aggregate energy efficiency of water provision.     

Modeling the Effects of Conservation,Demographics, Price,and Climate on Urban Water Demand in Los Angeles,California

With a service area population exceeding four million people and with close to 90 % of the water supply being imported from sources outside the city, the Los Angeles water system is subject to multiple stressors, including climate change and population growth. The influence of various factors on water demand in Los Angeles was evaluated through development and application of multiple linear regression models for residential, commercial, industrial, and governmental water demand categories from 1970 to 2014 in the service area of the Los Angeles Department of Water and Power. Performance of the models in describing historical water demand was compared using the coefficient of determination, mean average percent error, and normalized root mean square error. Overall, the results of the linear regression models demonstrated that each water demand category is affected by different parameters. However, price and population were found to have the most significant impact on all categories. The seasonality of residential water demand was well described with the model based on monthly data, with precipitation and temperature being highly significant factors. Fitting of the residential data furthermore revealed that price and conservation have significantly counteracted the impact of population growth on water demand.     

A Market Solution for the Israeli-Palestinian Water Dispute

The perceived shortage of water within Israel and the Palestinian authority raises the need to explore the ways and means to ameliorate existing and expected water scarcity. This study stresses the need for demand management and market allocation that will shift water from agriculture to other uses. Since the real price of water in this region is too high, water should not serve as input for many of the crops that are currently grown by the local population. The hidden and visible subsidies that are currently supporting the prices of water would be better used to create substituting employment to shift more farmers away from agricultural occupations. Such policy will ease the shortage of water that is created by policies and behavior that were aimed indirectly, to increase the use of water.     

城市居民用水阶梯水价计量模型及应用

为了科学地制定城市居民用水定价,以水价改革目的为指导,根据城市居民用水定价原则,结合需求弹性相关理论,建立基于正态分布假设的城市居民用水阶梯水价计量模型并给出模型的评价标准,对城市居民用水的不同阶梯定价模式进行评价.以北京市2004年水价听证会上提出的城市居民用水阶梯水价方案为实例进行研究,得出1:3:5的阶梯水价是更...     

Water vending in urban Sudan

Water vendors, selling water door‐to‐door from donkey carts, are an important source of domestic supply in low‐income urban areas in Sudan, as in other developing countries. A study of the demand for this service showed that it was of negligible elasticity, with no evidence of direct control of the price by a monopoly or cartel. It follows that the price of water paid by the poor could be greatly reduced by increased availability of water to the vendors or of credit for the purchase of donkeys and carts.     

Urban Water Demand for Service and Industrial Use: The Case of Zaragoza

Increased efforts to improve urban water management are focused on demand side policies, seeking to affect the behavior of users so that a “reasonable” use of water resources is reached. In this framework the accurate characterization of water demand play a major role in obtaining sufficient knowledge about this behavioral response to changes in price. In this paper we focus on the water demand of the services and industries connected to the public water network. To this end, we carry out an empirical estimation of urban water demand for service and industrial use in Zaragoza (Spain). The proposed model is a Koyck flow adjustment demand model, and a price specification, which is constructed as a function of the lagged average price, current marginal price and a price perception parameter. We use a dynamic panel data methodology to estimate the water demand function. As far as we are aware, this approach to service and industrial urban water demand is new in the literature. The analysis suggests that although price has a negative relationship with consumption, such an effect is reduced given that the price elasticity is lower than one in absolute value. Another relevant finding is that service and industrial urban users think that they pay a lower price than the actual price they pay.     

Spatial Determinants of Urban Residential Water Demand in Fortaleza,Brazil

This paper aims at estimating the residential water demand function for the city of Fortaleza, Brazil, considering the potential impact of including spatial effects in the model. The empirical evidence is a unique micro-data set obtained through a household water consumption survey carried out in 2007. We estimated three econometric models, which have as explanatory variables the average/marginal price, the difference, income, number of male and female residents and the number of bathrooms, under different spatial specifications: the Spatial Error Model (SEM), the Spatial Autoregressive model (SAR), and finally, the Spatial Autoregressive Moving Average model (SARMA). Results suggest that the SARMA model is the “best” as shown by a series of tests. Such results contradict conclusions drawn by Chang et al. (Urban Geogr 31(7):953–972, 2010), House-Peters et al. (JAWRA J Am Water Resour Assoc 46(3), 2010), and Ramachandran and Johnston (2011). This means, among other things, that not controlling spatial effects is a key specification error, underestimating the effect of almost all variables in the model. Sometimes, these differences can be as high as 24.66 % and 13.32 % for price elasticity in the Average Price and the McFadden models, respectively.     

Water demand related to availability and price in an irrigation district in the Segura Basin

A methodology is presented to determine the demand of water to alternative sources, given the benefit functions of irrigation water in each unit of demand, and assuming that farmers will buy water if the price is less than the marginal benefit. In the study area, the benefits of farmers are estimated based on the availability of conventional water resources, the water allocation made and the sale price of desalinated water. If the price of desalinated water is €0.43/m³ and water is allocated optimally in the irrigation units, the demand for water would increase to cover up to 69% of the water needs in the entire irrigated areas. The highest associated benefits would be attained with the lowest water prices and the lowest initial availability of water.