This study considers water use by Canadian manufacturing firms. The estimation of water demands is based on a detailed crosssectional survey of establishment-level observations on water prices, quantities, and expenditures. Industrial water use is modeled as having four components: intake, treatment prior to use, recirculation, and discharge. Average values for the estimated own-price elasticity for water intake range from-0.1534 to-0.5885. Water recirculation is found to be a substitute for both water intake and water discharge. This confirms that expanding the use of economic incentives (e.g., effluent fees) may be effective in encouraging firms to reduce their water use while increasing in-plant recirculation.

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Municipal water supply and sewage treatment utilities in Ontario, Canada, are studied in order to establish their costs of supply and evaluate their pricing practices. Prices charged to residential and commercial customers are found to be only a third and a sixth of the estimated marginal cost for water supply and sewage treatment, respectively. For example, the average price to residential customers is $0.32/m 3 while the estimated marginal cost is $0.87/m 3 . The estimated cost parameters are combined with estimated residential and non-residential demands functions in order to calculate approximate welfare losses that arise from over consumption. JEL classification code: Q25, L32Notes to Table 2: 1. Elasticities are calculated using mean values of the data. Figures in parentheses are standard errors.

There is a growing awareness to the role that natural resources such as water, land, forests and environmental amenities play in our lives. There are many competing uses for natural resources, and society is challenged to manage them for improving social well being. Furthermore, there may be dire consequences to natural resources mismanagement. Renewable resources such as water, land and the environment are linked, and decisions made with regard to one may affect the others. Policy and management of natural resources now require interdisciplinary approach including natural and social sciences to correctly address our society preferences.This series provides a collection of works containing most recent findings on economics, management and policy of renewable biological resources such as water, land, crop protection, sustainable agriculture, technology, and environmental health. It incorporates modern thinking and techniques of economics and management. Books in this series will incorporate knowledge and models of natural phenomena with economics and managerial decision frameworks to assess alternative options for managing natural resources and environment.Many countries contend with the problems of exploitation and pollution of water resources. With new water projects facing prohibitively high social costs, the era of development of new water resources to augment additional demands is behind us. The Economics of Water Demands addresses the issue of demand management as a policy response that sends signals to consumers and creates new sources of water. The book provides a comprehensive set of analyses of demand management in various sectors, including residential, agriculture, industry, and environment. It covers both the technical and the policy aspects of water demand management.

Despite the importance of water use by the industrial sector, little economic research has been conducted to study the nature of industrial water demands,. This paper uses a relatively simple model of input demands to test whether industrial water use is sensitive to changes to input prices or the level of production. Demands for four aspects of industrial water use (intake, treatment prior to use, recirculation, and treatment prior to discharge) are estimated as a system of simultaneous equations. The data set is a 1981 cross section of firm level observations on water use and expenditure. Empirical results are reported for four manufacturing subgroups: petrochemicals, heavy industry, forest industry, and light industry. Intake price elasticities range from -0.12 to -0.54 and intake elasticities with respect to the level of output range from 0.76 to 1.90. The cross price elasticity between intake and recirculation is positive for all subgroups (indicating substitutability) and ranges from 0.14 to 0.26.