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The generalised translog cost function to estimate tariffs for potable water: The case of Tunisia

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  • Amor, Tawfik Ben

Abstract

The present study aims to estimate the marginal cost of potable water supply and analyse the implications for more efficient, equitable and income-adequate tap water tariffs in Tunisia. Furthermore, this article aims to develop a new pricing model for potable water. Pricing by the Tunisian water utility focuses on setting water prices to cover average costs, often using designs that increase clogging rates. This results in a large volume of potable water being wasted. To facilitate the efficient estimation of pricing models, we attempt to introduce generalised translog (GT) cost specifications for multiple products including Box-Cox transformations. It turns out that the marginal social cost of providing a cubic meter of water must consist of two components: volumetric charges, at €0.048/m3, and connection water charges, of €0.055/km.

Suggested Citation

  • Amor, Tawfik Ben, 2022. "The generalised translog cost function to estimate tariffs for potable water: The case of Tunisia," African Journal of Agricultural and Resource Economics, African Association of Agricultural Economists, vol. 17(4), March.
    • Handle: RePEc:ags:afjare:333982
    DOI: 10.22004/ag.econ.333982
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    3. Elissa Cousin & Emmanuelle Taugourdeau, 2015. "Trade-off between water loss and water infrastructure quality: A cost minimization approach," Documents de travail du Centre d'Economie de la Sorbonne 15016, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
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