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Measuring Price Elasticities for Residential Water Demand with Limited Information

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  • H. Allen Klaiber
  • V. Kerry Smith
  • Michael Kaminsky
  • Aaron Strong

Abstract

This paper exploits the seasonal and annual changes in marginal prices for water to estimate the price elasticity of demand by residential households for water. It uses the changes in distributions of water used at the census block group levels in response to changes in marginal prices of water for matched months across years. This strategy reduces the interaction effects of outdoor use and demographic factors in determining responsiveness to price. By comparing years that vary in overall water availability, the framework can recover measures of how responses to price vary with season and drought conditions. The application is the urban Phoenix metropolitan area.

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File URL: http://le.uwpress.org/cgi/reprint/90/1/100
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Bibliographic Info

Article provided by University of Wisconsin Press in its journal Land Economics.

Volume (Year): 90 (2014)
Issue (Month): 1 ()
Pages: 100-113

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Handle: RePEc:uwp:landec:v:90:y:2014:i:1:p:100-113

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Web page: http://le.uwpress.org/

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  1. Chetty, Nadarajan, 2009. "Sufficient Statistics for Welfare Analysis: A Bridge Between Structural and Reduced-Form Methods," Scholarly Articles 9748528, Harvard University Department of Economics.
  2. Nataraj, Shanthi & Hanemann, W. Michael, 2008. "Does Marginal Price Matter? A Regression Discontinuity Approach to Estimating Water Demand," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series, Department of Agricultural & Resource Economics, UC Berkeley qt2jc295gr, Department of Agricultural & Resource Economics, UC Berkeley.
  3. Jasper M. Dalhuisen & Raymond J. G. M. Florax & JHenri L. F. de Groot & Peter Nijkamp, 2003. "Price and Income Elasticities of Residential Water Demand: A Meta-Analysis," Land Economics, University of Wisconsin Press, University of Wisconsin Press, vol. 79(2), pages 292-308.
  4. Peter C. Reiss & Matthew W. White, 2006. "Evaluating Welfare with Nonlinear Prices," NBER Working Papers 12370, National Bureau of Economic Research, Inc.
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