INCOME AND PRICE ELASTICITIES OF DEMAND FOR WATER IN DEVELOPING COUNTRIES¹

Abstract

The income and proce elasticity of demand for domestic water is estimated for Penang Island, Malaysia. A cross‐sectional analysis of a random sample of 1400 households indicated an income‐elasticity of zero for low‐income families (per capita income less than US$300) and an elasticity of 0.2‐0.4 for higher‐income families. A time‐series analysis of a subsample of individuals of varying income levels suggests a short‐run price elasticity of ‐0.1 to ‐0.2. The implications of these results for demand forecasting are discussed.

A multivariate econometric approach for domestic water demand modeling: An application to Kathmandu, Nepal

“…Hence, the application of multivariate coefficient demand model, that can integrate the effects of all or several of these factors, is gaining popularity. The water use/demand models proposed by Katzman (1977), Dandy et al (1997), Malla and Gopalakrishnan (1997), Billings and Agthe (1998), Lahlou and Colyer (2000) and Babel et al (2003) are some of the examples of multivariate and econometric water demand models. Katzman (1977) emphasized the importance of income and price elasticities for the projection of demand.…”

“…The water use/demand models proposed by Katzman (1977), Dandy et al (1997), Malla and Gopalakrishnan (1997), Billings and Agthe (1998), Lahlou and Colyer (2000) and Babel et al (2003) are some of the examples of multivariate and econometric water demand models. Katzman (1977) emphasized the importance of income and price elasticities for the projection of demand. Dandy et al (1997) found in Adelaide, Australia that water consumption above the free allowance; being sensitive to price, responds less to social and climatic factors than consumption below the free allowance.…”

Understanding urban residential water use in Beijing and Tianjin, China

“…Many factors affect residential water demand. Both empirical investigations and analytical studies of industrialized countries suggest several determinants of RWU: policy variables, such as water price or water rate; household economic variables, such as income; physical features and technological variables, such as water amenities and metering, or water-saving plumbing fixtures; environmental variables, such as temperature and precipitation; and demographic variables, such as household size and attitudinal variables (Howe & Linaweaver, 1967;Lee, 1969;Grima, 1972;Katzman, 1977;Holtz & Sebastin, 1978;Danielson, 1979;Clouster & Miller, 1980;Hanke & de Mar! e, 1982;Jones, Boland, Crews, DeKay, & Morris, 1984;Vickers, 1991;Baumann, Boland, & Hanemann, 1998).…”

The Limits of Water Pricing in a Developing Country Metropolis: Empirical Lessons from an Industrial City of Pakistan

“…Despite the fact that water demand analysis in developing economies started a long time ago [32], the literature on these countries has been limited in the past. The empirical analysis of the water demand function in developing countries is less focused because of the unavailability of data, as water consumption is not always metered.…”