Manufacturing Firms’ Demand for Water Recirculation

Abstract

Relatively little is known about the factors that influence firms’ water recirculation decisions. This paper estimates an econometric model that jointly considers two facets of firms’ recirculation behavior: first, the discrete decision of whether to recirculate and, second, the decision of how much to recirculate. The model is estimated by applying the Heckman two‐stage estimation procedure to cross‐sectional data from Environment Canada's 1996 Industrial Water Use Survey. In the first stage, long‐run factors, such as relative water scarcity and production technologies, are found to influence the decision whether to recirculate water. In the second stage, the imputed prices of intake water and water recirculation as well as the scale of operations are found to influence the choice of the optimal quantity of water to recirculate. Les facteurs qui influencent les décisions des entreprises concernant le recyclage de l’eau sont assez peu connus. Dans le présent article, nous avons estimé un modèle économétrique qui tient compte de deux aspects du comportement des entreprises envers le recyclage de l’eau : le choix de recycler l’eau ou non et le choix de la quantité d’eau à recycler. Nous avons estimé le modèle à l’aide de la procédure en deux étapes de Heckman que nous avons appliquée à des données transversales tirées de l’Enquête sur l’utilisation industrielle de l’eau, réalisée par Environnement Canada en 1996. À la première étape, des facteurs à long terme tels que la rareté relative de l’eau et les technologies de production influent sur la décision de recycler l’eau ou non. À la deuxième étape, les prix imputés du captage et du recyclage de l’eau ainsi que l’envergure des opérations influent sur le choix de la quantité optimale d’eau à recycler.

The Groundwater Demand for Industrial Uses in Areas with Access to Drinking Publicly-Supplied Water: A Microdata Analysis

“…This result differs from that obtained by Reynaud [16] according to which publicly-supplied and self-supplied water for manufacturing firms are complementary, although the elasticities obtained in this case are not significant. However, the result coincides with that usually obtained in literature focused on recirculated vs. intake water in the industry [22,23,[41][42][43][44] or on the demand of different types of water by households (for example, [17][18][19]).…”

“…Also, the probability of self-supply is 0.0553% higher for manufacturing companies. Therefore, the most relevant effects occur through the sectoral dummy and the price of publicly-supplied water, being the magnitude of the latter effect in the middle range of values previously obtained in the literature for the probability of recirculated water, which ranges from 0.02 [23] to 0.05 [22]. For the other variables, there are no previous results in the literature for establishing a comparison.…”

“…Renzetti [15] and Reynaud [16] also obtained a negative sign for self-supplied water in industry for the coefficient of this variable, although it is hardly significant. However, this variable appears to be very relevant in the case of recirculated water, with a negative impact on the volume of processed water [21,22,[41][42][43], the same as for household self-supply [17][18][19][20].…”

Current and Emerging Water Issues in Agriculture: An Overview

“…Demand for water is growing. Combined with a fixed or falling quantity of water, this has led to the adoption of new technologies and production practices to increase water-use efficiency or, with respect to industry, to recycle water (Bruneau et al 2010). For example, low-pressure irrigation systems have been adopted to increase water-use efficiency, but the rate of adoption depends on many farm characteristics in addition to water savings (Seo et al 2008).…”

“…Finally, the value of water to industry is generally higher than for agriculture. Water in the Snake River District during low-flow periods was found to have a value associated with hydro power that was 10 times that of irrigation (Hamilton et al 1989), and for many industrial processes the high cost and value of quality water encourages conservation through water recirculation (Bruneau et al 2010).…”