Modeling water demand when households have multiple sources of water

Abstract

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.

Addressing how multiple household water sources and uses build water resilience and support sustainable development

“…1,3,[15][16][17][18][19] The routine use of multiple household water sources is practiced across settings that vary in precipitation patterns, water resources, piped water availability, etc. For example, it has been reported in many countries across Southeast Asia, 17,[20][21][22] Sub-Saharan Africa, 2,3,12-16,22-24 North Africa, 25 Western Asia, 26 East Asia, 27 South Asia, 8,28 Oceania 1,11,19 , and Latin America. 18,29 Use of multiple sources in wealthy countries typically involves tap water and bottled water for consumption and other indoor uses, with limited use of harvested rainwater, gray water or shallow well water for aquifer recharge, gardening, and irrigation.…”

Multiple Household Water Sources and Their Use in Remote Communities With Evidence From Pacific Island Countries

“…Global water research, surveys, and data sets neglect the use of more than one water source to meet daily household needs, a common and important practice in many developing country settings. There is a small body of economics literature on modeling household demand for multiple water sources in developing countries (e.g., Coulibaly et al, ; Devoto et al, ; Madanat & Humplick, ; Mu et al, ; Nauges & Whittington, ; Pattanayak et al, ). However, we could identify only a few journal articles (Adekalu et al, ; Almedom & Odhiambo, ; Howard et al, ; Özdemir et al, ; Tucker et al, ; Vedachalam et al, ) and one conference proceedings paper (Smith et al, ) that describe in detail and/or quantify multiple household water sources.…”

Increasing Block Tariffs in an Arid Developing Country: A Discrete/Continuous Choice Model of Residential Water Demand in Jordan

“…The tariff rate endogeneity problem under IBTs can, however, be addressed more consistently by the DCC approach: A DCC model explicitly captures every aspect of an IBT, thereby neutralizing the causal effect of consumption on the tariff rate without removing the observed price values, which leads to more accurate estimation results [13][14][15]. In a study of residential water demand in the Jordanian governorate of Zarqa, Coulibaly et al [35] discussed the possibility of employing a DCC model to capture the relevant IBT and came to the conclusion that the linearly progressive tariff block used in Jordan until 2011 makes a direct application of the DCC model developed by Hewitt and Hanemann infeasible [13]. We address this challenge by extending the original DCC formulation outlined by Hewitt and Hanemann to allow for the inclusion of linearly progressive tariff blocks.…”