A Discrete/Continuous Choice Approach to Residential Water Demand under Block Rate Pricing

Hewitt, Julie; Hanemann, W. Michael

doi:10.2307/3146499

Cited by 237 publications

(295 citation statements)

References 0 publications

Supporting

Mentioning

276

Contrasting

Unclassified

Order By: Relevance

“…The price specification controversy has another related dimension as argue that the whole price schedule rather than any single price, whether the average or marginal price, has to be used in demand estimation. Nieswiadomy and Molina [1989] and Hewitt and Hanemann [1995] have, in fact, used such a price formulation. Interestingly, these issues are interlinked as both of them have their origin in the block rate system with a fixed fee component where price becomes endogenous, varying with consumption, causing the simultaneity problem.…”

Section: An Analytical Review Of Existing Literaturementioning

confidence: 99%

Preconditions for market solution to urban water scarcity: Empirical results from Hyderabad City, India

Dinar¹

2001

Water Resources Research

View full text Add to dashboard Cite

Abstract. Utilizing both primary and secondary information pertaining to the water sector of Hyderabad City, India, this paper (1) evaluates the economics of various technically feasible supply augmentations options; (2) estimates the group-specific water demand and consumption response functions under alternative pricing behaviors; (3) calculates the net willingness to pay (NWTP, considered to be the value of raw water at source) of different user groups as derived from their respective price elasticities; (4) shows how inadequate the NWTP is to justify most supply augmentation options including intersectoral water transfers under the existing water rate structure; (5) argues that the economic and institutional conditions internal to urban water sector cannot justify an externally imposed water transfers, whether market-based or otherwise, as long as the water rate structure is inefficient and regressive; and (6) concludes by underlining the central role that the pricing option, both the level and structure, Plays not only in activating a number of nonprice options but also in generating incentives for the emergence of new and the consolidation of existing institutional conditions needed to support economically rooted water transfers and conservation initiatives.

show abstract

Section: An Analytical Review Of Existing Literaturementioning

confidence: 99%

Preconditions for market solution to urban water scarcity: Empirical results from Hyderabad City, India

Dinar¹

2001

Water Resources Research

View full text Add to dashboard Cite

show abstract

“…They obtain elasticities of -0.36 and -0.55 under decreasing and increasing block rates respectively. Hewitt and Hanemann (1995) apply the discrete-continuous approach to Nieswiadomy and Molina (1989) data corresponding to the period with increasing block tari¤s and obtain elasticities between -1.57 and -1.63.…”

Section: Overview Of the Literaturementioning

confidence: 99%

“…Hewitt and Hanemann (1995) is the …rst study that apply the discrete-continuous choice approach to water demand. With this framework, the discussion of whether to use marginal or average price has no sense because the marginal price is the price that de…nes the budget constraint.…”

Section: Overview Of the Literaturementioning

confidence: 99%

“…So, authors have to use proxies for income. This is the case in Hewitt and Hanemann (1995). They use the value of the home for tax assesment purposes as a proxy for the household income.…”

Section: Introductionmentioning

confidence: 99%

“…The analysis of demand models with nonlinear budget sets started with Burtless and Hausman (1978) in the context of labour supply. Later, Hewitt and Hanemann (1995) applied it to the water context.…”

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

Microeconometric Analysis of Residential Water Demand

Lopez-Mayan

2013

Environ Resource Econ

View full text Add to dashboard Cite

I present a microeconometric model to analyse residential water demand using panel data. Pricing has an increasing-block structure. Database contains individual consumptions from water meters and lacks further information. Permanent income is treated as an unobservable individual e¤ect determining optimal consumption. I also consider a time-varying shock to connect latent and observed demands. The economic setup gives rise to a random e¤ects model with a nonlinear individual e¤ect. I use likelihood-based indirect inference for estimation. I compute price-elasticities and predict the e¤ects of a tari¤ change. The methodology can be applied to analyse demands of other goods with increasing tari¤s.

show abstract

Modeling water demand when households have multiple sources of water

Coulibaly

Jakus

Keith

2014

Water Resources Research

View full text Add to dashboard Cite

A significant portion of the world's population lives in areas where public water delivery systems are unreliable and/or deliver poor quality water. In response, people have developed important alternatives to publicly supplied water. To date, most water demand research has been based on singleequation models for a single source of water, with very few studies that have examined water demand from two sources of water (where all nonpublic system water sources have been aggregated into a single demand). This modeling approach leads to two outcomes. First, the demand models do not capture the full range of alternatives, so the true economic relationship among the alternatives is obscured. Second, and more seriously, economic theory predicts that demand for a good becomes more price-elastic as the number of close substitutes increases. If researchers artificially limit the number of alternatives studied to something less than the true number, the price elasticity estimate may be biased downward. This paper examines water demand in a region with near universal access to piped water, but where system reliability and quality is such that many alternative sources of water exist. In extending the demand analysis to four sources of water, we are able to (i) demonstrate why households choose the water sources they do, (ii) provide a richer description of the demand relationships among sources, and (iii) calculate own-price elasticity estimates that are more elastic than those generally found in the literature.

show abstract

A Discrete/Continuous Choice Approach to Residential Water Demand under Block Rate Pricing

Cited by 237 publications

References 0 publications

Preconditions for market solution to urban water scarcity: Empirical results from Hyderabad City, India

Preconditions for market solution to urban water scarcity: Empirical results from Hyderabad City, India

Microeconometric Analysis of Residential Water Demand

Modeling water demand when households have multiple sources of water

Contact Info

Product

Resources

About