Price and Income Elasticities of Residential Water Demand: A Meta-Analysis

Dalhuisen, J.M.; Florax, Raymond J.G.M.; Groot, H.L.F. de; Nijkamp, Peter

doi:10.2307/3146872

Cited by 492 publications

(412 citation statements)

References 27 publications

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“…7 All other things being 6 The average own price elasticity is -0.51 in industrialized countries (Espey, Espey and Shaw, 1997). See also Arbués-Gracia, García-Valiñas and Martínez-Espiñeira (2003), Dalhuisen et al (2003), Ferrara (2007), or Worthington and Hoffman (2008) for comprehensive reviews of residential water demand estimation. 7 Even if water demand has been found inelastic to price in the bulk of water demand studies, household water use, in all cases, do respond significantly to price variation, though in a moderate manner (residential demand equal, Renwick and Archibald (1998) show that the use of one low-flow toilet decreases household water use by 10% while the use of one low-flow showerhead results in a 8% decrease in household water consumption.…”

Section: Urban Water Demand Side Management Policiesmentioning

confidence: 99%

Household Adoption of Water-Efficient Equipment: The Role of Socio-Economic Factors, Environmental Attitudes and Policy

Millock

Nauges

2010

Environ Resource Econ

143

103

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Using unique survey data of 10,000 households from 10 OECD countries, we identify the driving factors of household adoption of water-efficient equipment by estimating Probit models of a household's probability to invest in such equipment. The results indicate that the adoption of water-efficient equipment is the most strongly affected by ownership status, by being metered and charged a volumetric charge on water consumption, and by behavioural factors. Environmental attitudes are strong predictors of adoption of water-efficient equipment, with a marginal effect that exceeds ownership status in some cases. In terms of policy, we find that households that were both metered and charged for their water individually had a much higher probability to invest in water-efficient equipment compared to households that were not charged for their water.

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Section: Urban Water Demand Side Management Policiesmentioning

confidence: 99%

Household Adoption of Water-Efficient Equipment: The Role of Socio-Economic Factors, Environmental Attitudes and Policy

Millock

Nauges

2010

Environ Resource Econ

143

103

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“…One general result from these studies is that water demand is price inelastic, with the absolute value of the estimated price elasticities generally below 0.5 [Hanemann, 1998]. In a meta-analysis of residential water demand, Dalhuisen et al [2003] find a mean price elasticity of demand of À0.41, while Espey et al [1997] find a median short-run price elasticity of À0.38, and a median long-run price elasticity of À0.64. Many of the recent papers in the study of urban water demand have focused on estimation under block rate pricing, and the implications of appropriately accounting for both the discrete choice of which block to choose, and the continuous choice of how much water to use [Hewitt and Hanemann, 1995;Dalhuisen et al, 2003].…”

Section: Introductionmentioning

confidence: 99%

“…In a meta-analysis of residential water demand, Dalhuisen et al [2003] find a mean price elasticity of demand of À0.41, while Espey et al [1997] find a median short-run price elasticity of À0.38, and a median long-run price elasticity of À0.64. Many of the recent papers in the study of urban water demand have focused on estimation under block rate pricing, and the implications of appropriately accounting for both the discrete choice of which block to choose, and the continuous choice of how much water to use [Hewitt and Hanemann, 1995;Dalhuisen et al, 2003]. This work has found that estimating urban water demand using the discrete-continuous approach finds a much more elastic price elasticity of demand than studies which do not explicitly model both choices.…”

Section: Introductionmentioning

confidence: 99%

Price elasticity reconsidered: Panel estimation of an agricultural water demand function

Schoengold

Sunding

Moreno

2006

Water Resources Research

118

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[1] Using panel data from a period of water rate reform, this paper estimates the price elasticity of irrigation water demand. Price elasticity is decomposed into the direct effect of water management and the indirect effect of water price on choice of output and irrigation technology. The model is estimated using an instrumental variables strategy to account for the endogeneity of technology and output choices in the water demand equation. Estimation results indicate that the price elasticity of agricultural water demand is À0.79, which is greater than that found in previous studies.

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“…Dalhuisen et al (2003) obtain a mean own-price elasticity of 0.41 in a meta-analysis of almost 300 studies over the period , and in a similarly extensive survey of the water demand literature, Olmstead and Stavins (2008) find that the price elasticity of residential demand varies substantially across place and time, but on average, in the U.S., a ten percent increase in the marginal price of water in the urban residential sector can be expected to diminish demand by about three to four percent. Finally, in another meta-analysis of the variation in estimates of price elasticities taken from 24 studies of residential water demand published in journals between 1967 and 1993, Espey et al (1997) noted that estimates of the elasticities ranged from -0.02 to -3.33, with a mean of -0.51, and that 90 percent of the estimates fell between -0.50 and -0.75.…”

Section: Appendix 1: Calculation Of Own-and Cross-price Elasticities mentioning

confidence: 99%

“…In their meta-analysis of 124 estimates generated between 1963 and 1993, (Espey and Shaw 1997) obtain an average price elasticity of -0.51. Dalhuisen et al (2003) obtain a mean price elasticity of 0.41 in a meta-analysis of almost 300 price elasticity studies, . In their survey of the water demand literature, Olmstead and Stavins (2008) concluded that the price elasticity of residential demand varies substantially across place and time, but on average, in the United States, a ten percent increase in the marginal price of water in the urban residential sector can be expected to diminish demand by about three to four percent.…”

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confidence: 99%

On the Distributional Implications of Safe Drinking Water Standards

Cory¹,

Taylor²

2017

J. Benefit Cost Anal.

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The provision of safe drinking water provides a dramatic example of the inherent complexity involved in incorporating environmental justice (EJ) considerations into the implementation and enforcement of new environmental standards. To promote substantive EJ, implementation policy must be concerned with the net risk reduction of new and revised regulations. The regulatory concern is that higher water bills for low-income customers of small public water systems may result in less disposable income for other health-related goods and services. In the net, this tradeoff may be welfare decreasing, not increasing. Advocates of Health-Health Analysis have argued that the reduction in health-related spending creates a problem for traditional benefit-cost analysis since the long-run health implications of this reduction are not considered. The results of this investigation tend to support this contention. An evaluation of the internal structure of consumption expenditures reveals that low-expenditure households can be expected to react to an increase in the relative price of housing-related goods and services due to a water-rate hike by reducing both housing and health-related expenditures. That is, the representative lowexpenditure household re-establishes equilibrium by not only decreasing housing-related spending, but also by decreasing spending on health-related expenditures in a modest but significant way. These results reflect the fact that expenditures on housing are a major proportion of overall household spending, and that accommodating drinking water surcharges exacerbates both health and food security concerns for low-expenditures households.

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Price and Income Elasticities of Residential Water Demand: A Meta-Analysis

Cited by 492 publications

References 27 publications

Household Adoption of Water-Efficient Equipment: The Role of Socio-Economic Factors, Environmental Attitudes and Policy

Household Adoption of Water-Efficient Equipment: The Role of Socio-Economic Factors, Environmental Attitudes and Policy

Price elasticity reconsidered: Panel estimation of an agricultural water demand function

On the Distributional Implications of Safe Drinking Water Standards

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