Demand for Piped and Non-piped Water Supply Services: Evidence from Southwest Sri Lanka
AbstractIn many countries water supply is a service that is seriously underpriced, especially for residential consumers. This has led to a call for setting cost recovery policies to ensure that the tariffs charged for water supply cover the full cost of service provision. Identification of factors driving piped and non-piped water demand is a necessary prerequisite for predicting how consumers will react to such price increases. Using cross-sectional data of 1,800 households from Southwest Sri Lanka, we estimate water demand functions for piped and non-piped households using appropriate econometric techniques. The (marginal) price elasticity is estimated at Ã¢Ëâ 0.15 for households exclusively relying on piped water, and at Ã¢Ëâ 0.37 for households using piped water but supplementing their supply with other water sources. The time cost elasticity for households relying on non-piped water only is estimated at Ã¢Ëâ 0.06 on average, but varying across sources. For both piped and non-piped households, we find evidence of substitutability between water from different sources. We discuss the implications of these results in terms of pricing policy.
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Bibliographic InfoArticle provided by European Association of Environmental and Resource Economists in its journal Environmental and Resource Economics.
Volume (Year): 42 (2009)
Issue (Month): 4 (April)
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Web page: http://www.springerlink.com/link.asp?id=100263
Demand estimation; Household water use; Piped and non-piped water services; Price elasticity; Pricing policy; Sri Lanka;
Other versions of this item:
- Celine Nauges & Caroline van den Berg, 2009. "Demand for piped and non-piped water supply services: evidence from southwest Sri Lanka," Working Papers 29981, Institut National de la Recherche Agronomique, France.
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