Political economy of water pricing policy: Empirical evidence from public utilities in Mauritius

Abstract

[1] This paper examines whether political economy considerations are important in the formulation of water pricing policy in Mauritius. Empirical models are developed incorporating current and lagged electoral years as dummy variables in order to test whether politicians make strategic use of water pricing policy to further their partisan electoral objectives. Political economy concerns are also included into our analysis by looking at the impact of lobby groups on the implementation of water prices. In the case of potable water prices, a disaggregated analysis according to consumer categories provides weak evidence of political manipulation. However, political manipulation is established in terms of subsidy allocations to the residential sector, which is the largest consumer category. As regards irrigation water, the results lend support to the contention that political parties indeed manipulate irrigation subsidies allocated to the Irrigation Authority. Evidence on the lobby effect emerges from our empirical analysis on potable water. More specifically, we find that smaller groups have successfully been able to use their political influence to obtain smaller water price increases.

Calculation of Water Resource Value in Nanjing Based on a Fuzzy Mathematical Model

“…The current government-led water pricing model does not reflect the leverage of the market economy, because the water market price is set too low to be conducive to the sustainable development of water resources [1]. According to the principles of political economy, the price is the monetary performance of the value, and a reasonable water price should be based on scientific measurement of the value of water resources [2]. Therefore, an in-depth study of the water resource value has implications in setting water market prices, improving effective allocations of water resources and rational use, which are all critical in achieving the harmonious unification of ecological and social development.…”

International Trends in Water Utility Regimes

“…This may give way to political economy considerations where lobbies and interest groups assume significance. In a recent paper, Madhoo (2004) uses an econometric methodology with Mauritian data to provide empirical evidence on political manipulation and electoral cycles for allocation of subsidies. This paper also presents a review of research establishing political economy concerns for other countries.…”

Evaluating Water Resource Assets Based on Fuzzy Comprehensive Evaluation Model: A Case Study of Wuhan City, China

“…Further, there is the problem of water shortages. The unreasonable pricing mechanism of water resources [2] has led to neglecting the importance of water resources [3,4]. Water, an indispensable resource for human life and socioeconomic development, has been degraded and depleted in China [5,6].…”

“…Located in the middle part of China in the Yangtze River Basin, Wuhan is the core city in the central region and has a total area of 8494.41 km 2 . In 2017, Wuhan had a permanent population of 10,914,000 people and a regional gross domestic product of US$198.47 billion.…”