Comparing Residential Water Demand Estimates under Decreasing and Increasing Block Rates Using Household Data

Nieswiadomy, Michael; Molina, David J.

doi:10.2307/3146672

Cited by 162 publications

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“…Although there are studies [Nieswiadomy and Molina, 1989] providing evidence for the simultaneity problem, there are also others giving evidence to the contrary. For example, Jones and Morris [1984] find their OLS and IV estimates to be almost the same.…”

Section: An Analytical Review Of Existing Literaturementioning

confidence: 99%

“…Simultaneity is likely to be a serious problem in the context of both aggregate data, where there is scope for spatial/ temporal variations in the rate structure, and microdata, when users in the lowest consumption slab with a fixed fee dominate the sample. Obviously, studies using data with these characteristics [Billings and Agthe, 1980;Nieswiadomy and Molina, 1989] may require an explicit econometric correction for simultaneity through the use of IV, 2-SLS, or 3-SLS technique. In other contexts, where the data allow the estimation of disaggregated demand functions for different user groups defined preferably by consumption brackets and water demand potential, the difference variable is adequate to handle simultaneity, and the OLS procedure is enough to yield reliable estimates.…”

Section: An Analytical Review Of Existing Literaturementioning

confidence: 99%

“…The estimation techniques used by the latter studies are based on instrumental variables (IV) Nieswiadomy and Molina, 1989], two-stage least squares (2-SLS) [Nieswiadomy and Molina, 1989;McKean et al, 1996], and 3-SLS [Agthe et al, 1986;Chicoine et al, 1986].…”

Section: An Analytical Review Of Existing Literaturementioning

confidence: 99%

See 2 more Smart Citations

Preconditions for market solution to urban water scarcity: Empirical results from Hyderabad City, India

Dinar¹

2001

Water Resources Research

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Abstract. Utilizing both primary and secondary information pertaining to the water sector of Hyderabad City, India, this paper (1) evaluates the economics of various technically feasible supply augmentations options; (2) estimates the group-specific water demand and consumption response functions under alternative pricing behaviors; (3) calculates the net willingness to pay (NWTP, considered to be the value of raw water at source) of different user groups as derived from their respective price elasticities; (4) shows how inadequate the NWTP is to justify most supply augmentation options including intersectoral water transfers under the existing water rate structure; (5) argues that the economic and institutional conditions internal to urban water sector cannot justify an externally imposed water transfers, whether market-based or otherwise, as long as the water rate structure is inefficient and regressive; and (6) concludes by underlining the central role that the pricing option, both the level and structure, Plays not only in activating a number of nonprice options but also in generating incentives for the emergence of new and the consolidation of existing institutional conditions needed to support economically rooted water transfers and conservation initiatives.

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Section: An Analytical Review Of Existing Literaturementioning

confidence: 99%

Section: An Analytical Review Of Existing Literaturementioning

confidence: 99%

See 1 more Smart Citation

Preconditions for market solution to urban water scarcity: Empirical results from Hyderabad City, India

Dinar¹

2001

Water Resources Research

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“…They estimate the regressions using IV, 2SLS or 3SLS to avoid the endogeneity derived from the simultaneous decision of marginal price and quantity. An example of these studies is Nieswiadomy and Molina (1989).…”

Section: Overview Of the Literaturementioning

confidence: 99%

“…They obtain elasticities of -0.36 and -0.55 under decreasing and increasing block rates respectively. Hewitt and Hanemann (1995) apply the discrete-continuous approach to Nieswiadomy and Molina (1989) data corresponding to the period with increasing block tari¤s and obtain elasticities between -1.57 and -1.63.…”

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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Modeling water demand when households have multiple sources of water

Coulibaly

Jakus

Keith

2014

Water Resources Research

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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.

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Comparing Residential Water Demand Estimates under Decreasing and Increasing Block Rates Using Household Data

Cited by 162 publications

References 0 publications

Preconditions for market solution to urban water scarcity: Empirical results from Hyderabad City, India

Preconditions for market solution to urban water scarcity: Empirical results from Hyderabad City, India

Microeconometric Analysis of Residential Water Demand

Modeling water demand when households have multiple sources of water

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