Water demand under alternative price structures

Olmstead, Sheila M.; Hanemann, W. Michael; Stavins, Robert N.

doi:10.1016/j.jeem.2007.03.002

Cited by 324 publications

(254 citation statements)

References 28 publications

(75 reference statements)

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“…First, the usual assumption for estimation is that the marginal prices of all blocks increase equally by 1 percent (Olmstead et al, 2007). It is obvious from Table 9 that this is not true for the tariff switches considered in this study.…”

Section: Payers Of Subsidiesmentioning

confidence: 97%

“…Second, there is evidence that price elasticities differ according to the price scheme studied. Under uniform pricing, elasticity seems to be somewhat lower than under IBT schemes (Olmstead et al, 2007); note that we consider a switch from one type to the other. A third complication results from the fact that even though there are estimators and methodologies to estimate unconditional elasticities for IBT schemes (see e.g.…”

Section: Payers Of Subsidiesmentioning

confidence: 99%

“…A third complication results from the fact that even though there are estimators and methodologies to estimate unconditional elasticities for IBT schemes (see e.g. Olmstead et al, 2007), these are not applied in developing countries' studies due to a lack of data. That is, the elasticity range of [-0.3,-0.8] only applies to quantity adjustments conditional on remaining within the same consumption block.…”

Section: Payers Of Subsidiesmentioning

confidence: 99%

See 2 more Smart Citations

Distributional effects of water tariff reforms – An empirical study for Lima, Peru

Barde

Lehmann

2014

Water Resources and Economics

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in AbstractThis study analyzes the affordability and distributional implications of water tariff reforms for poor water customers under means-tested tariffs in comparison to increasing block tariffs (IBTs) using volumetric targeting. For this purpose, we employ a unique data set for Lima, Peru. Our analysis reveals that from a pro-poor perspective, the performance of means-tested tariffs is mixed. On the one hand, they distribute more income to poor households than the IBTs, given the assumption that the overall revenue to the water supplier remains constant.On the other hand, the share of poor customers who actually benefit from water subsidies declines with means-testing. Nevertheless, means-tested tariffs clearly outperform IBTs in terms of excluding non-poor customers from being subsidized. These findings should be generalized with care as the performance of the tariff crucially depends on the cut-off value for cross-subsidies and the block prices chosen under volumetric targeting and on the design of the means-test. Our analysis further suggests that a proper assessment of individual welfare effects should take household size into account and rest on a broad set of affordability and distributional indicators. Interestingly, our results are relatively insensitive to the price elasticity of water demand.

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Section: Payers Of Subsidiesmentioning

confidence: 97%

Section: Payers Of Subsidiesmentioning

confidence: 99%

Section: Payers Of Subsidiesmentioning

confidence: 99%

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Distributional effects of water tariff reforms – An empirical study for Lima, Peru

Barde

Lehmann

2014

Water Resources and Economics

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“…A recent paper (Olmstead, Hanemann and Stavins 2007) applies the discrete-continuous approach to estimate price-elasticity using daily household consumptions. Its dataset is very rich and corresponds to eleven urban areas in United States and Canada.…”

Section: Overview Of the Literaturementioning

confidence: 99%

Microeconometric Analysis of Residential Water Demand

Lopez-Mayan

2013

Environ Resource Econ

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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.

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“…Water managers traditionally have maintained that consumers do not respond to price signals, so demand management has occurred most frequently through restrictions on specific water uses (i.e., banning car washing and lawn irrigation) and requirements for the adoption of specific technologies. In theory, raising prices to bring about water conservation is less costly than implementing a command-and-control approach, even if the prices in question are inefficient (29).…”

Section: Developing Governance Strategies For a Dynamic Worldmentioning

confidence: 99%

Global Stressors on Water Quality and Quantity

Zimmerman

Mihelcic²,

Smith³

2008

Environ. Sci. Technol.

177

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Growing population and wealth will impact sustainability, technology selection, and governance strategies related to water issues. JULIE BETH ZIMMERMAN YALE UNIVERSITY JAMES R. MIHELCIC MICHIGAN TECHNOLOGICAL UNIVERSITY JAMES SMITH UNIVERSITY OF VIRGINIAThis inequality is especially critical for Asia, which has 60% of the world's population but only 36% of the world's water. Water quality in terms of pollutant loading also is not distributed equally and is related to the type of use and a country's level of development (Figure 2). Developing countries often have less capacity to improve water quality and depend on lower-quality water for a variety of uses, including drinking water.To capture an overall picture of a nation's water use, researchers calculate the national water footprint; this represents the total volume of freshwater used to produce the goods and services consumed by a population and the impact of globalization by F or more than a decade, the scientific community as well as nongovernmental organizations have sought to raise an alarm concerning the unsustainable use of the planet's available water resources (1). Rising world populations and consumption are inexorably increasing human demand for domestic, industrial, and agricultural water. Population and wealth along with other global stressors will have a direct and significant impact on the sustainability goals, technology selection, and governance strategies that are related to water quality and quantity.On a global basis, ~70% of freshwater is currently used for crop irrigation, ~20% for industrial purposes, and ~10% for domestic purposes (2). However, water use varies dramatically from one part of the world to another. Egypt, for example, uses 98% of its water for irrigation, leaving only ~27 L/capita-day for domestic use. In contrast, the U.S. uses 40% of its water for irrigation, and domestic water use exceeds 410 L/ capita-day. In refugee camps in Africa and Asia, residents may receive only 15 L/capita-day for both consumption and hygiene. For comparison, the World Health Organization defines reasonable access as the availability of at least 20 L/capita-day from a source within 1 km of the user's dwelling (3).Although the quantity of water used varies by region, water is not distributed equally (Figure 1).

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Water demand under alternative price structures

Cited by 324 publications

References 28 publications

Distributional effects of water tariff reforms – An empirical study for Lima, Peru

Distributional effects of water tariff reforms – An empirical study for Lima, Peru

Microeconometric Analysis of Residential Water Demand

Global Stressors on Water Quality and Quantity

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