The price elasticity of transferring agricultural water to industrial water during non-drought period in Taiwan

Abstract

In this study, the demand function for the transferring agricultural water to industrial water during non-drought period covering from January 1998 to December 2008 in Taiwan was estimated, and the water usage statistics derived from the short-term water charge agreements, regarding the charging of water management fees and water usage fees from the irrigation associations, were applied to the estimation in the empirical model. The results of the research are presented as follows: (a) the demand for transferring agricultural water into industrial water is non-elastic; the price elasticity is -0.368; (b) the transferred water volume decreases when the water price rises; (c) the transferred water volume also decreases when the wholesale price index of domestic products rises; (d) the buyer's industry classification was the significant factor influencing the transfer water demand; (e) the different title of transferred water including: ''building utilization cost'' or that in ''costs for enhanced irrigation management'' was the significant factor influencing the transfer water demand; (f) type of repository of irrigation association for transferred water was the significant factor influencing the transfer water demand; (g) whether irrigation association enhances irrigation management was the significant factor influencing the transfer water demand; (h) the source of transferred water was the significant factor influencing the transfer water demand; (i) the method for water transfer was the significant factor influencing the transfer water demand; (j) more water transferred by the industry when the total population of Taiwan increases;(k) the transferred water volume rises when the groundwater level of the water transferred area rises; and (l) the areas for water transferred was the significant factor influencing the transfer water demand.

Estimation of Irrigation Water Demand and Economic Returns of Water in Zhangye Basin

“…For instance, the estimated price elasticities of demand for water used in wheat production ranges from −0.12 to −0.03 [19][20][21]; those for maize fall between −0.67 and −0.04 [22][23][24]. Similar to other parts of the world, irrigation water demands in China are also not responsive to small changes in water prices [25][26][27]. For example, using household cross section data from ZB, Zhou et al [28] estimated the price elasticity of irrigation water demand was about −0.55.…”