IDEAS home Printed from https://ideas.repec.org/p/een/cweanu/1005.html
   My bibliography  Save this paper

Economics of Water Reform in the Murray-Darling Basin

Author

Listed:
  • Maria A. García‐Valiñas
  • Roberto Martínez‐Espiñeira
  • Francisco González‐Gómez

Abstract

Using information on a basic or “lifeline” level of domestic water use obtained from a Stone-Geary water demand function and estimated at around 128m3 per household per year, we calculate water affordability indexes relating the cost of such lifeline to average municipal income levels in a sample of municipalities in Southern Spain. The analysis of the factors behind the differences in that ratio across municipalities shows that the relative cost of purchasing the lifeline appears inversely related to average income levels. We also found that higher charges affect the basic levels of use in tourist municipalities, and that lower prices are charged where water services are directly managed by the municipality.

Suggested Citation

  • Maria A. García‐Valiñas & Roberto Martínez‐Espiñeira & Francisco González‐Gómez, 2010. "Economics of Water Reform in the Murray-Darling Basin," Centre for Water Economics, Environment and Policy Papers 1005, Centre for Water Economics, Environment and Policy, Crawford School of Public Policy, The Australian National University.
    • Handle: RePEc:een:cweanu:1005
    as

    Download full text from publisher

    File URL: http://cweep.anu.edu.au/pdf/publications/research_papers/10-05_WaterAffordability.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Xayavong, Vilaphonh & Burton, Michael P. & White, Benedict, 2007. "Estimating Urban Residential Water-Demand with Increasing Block Prices: The Case of Perth, Western Australia," Working Papers 7061, University of Western Australia, School of Agricultural and Resource Economics.
    2. Rita Martins & Adelino Fortunato, 2005. "Residential water demand under block rates: a Portuguese case study," GEMF Working Papers 2005-09, GEMF, Faculty of Economics, University of Coimbra.
    3. Alain Carpentier & Céline Nauges & Arnaud Reynaud & Alban Thomas, 2006. "Effets de la délégation sur le prix de l'eau potable en France. Une analyse à partir de la littérature sur les «effets de traitement»," Économie et Prévision, Programme National Persée, vol. 174(3), pages 1-19.
    4. Schleich, Joachim & Hillenbrand, Thomas, 2009. "Determinants of residential water demand in Germany," Ecological Economics, Elsevier, vol. 68(6), pages 1756-1769, April.
    5. Céline Nauges & Alban Thomas, 2000. "Privately Operated Water Utilities, Municipal Price Negotiation, and Estimation of Residential Water Demand: The Case of France," Land Economics, University of Wisconsin Press, vol. 76(1), pages 68-85.
    6. Yeti Nisha Madhoo, 2009. "Policy and nonpolicy determinants of progressivity of block residential water rates - a case study of Mauritius," Applied Economics Letters, Taylor & Francis Journals, vol. 16(2), pages 211-215.
    7. Andrew C. Worthington & Mark Hoffman, 2008. "An Empirical Survey Of Residential Water Demand Modelling," Journal of Economic Surveys, Wiley Blackwell, vol. 22(5), pages 842-871, December.
    8. Roberto Martinez-Espineira & Celine Nauges, 2004. "Is all domestic water consumption sensitive to price control?," Applied Economics, Taylor & Francis Journals, vol. 36(15), pages 1697-1703.
    9. Sylvestre Gaudin & Ronald C. Griffin & Robin C. Sickles, 2001. "Demand Specification for Municipal Water Management: Evaluation of the Stone-Geary Form," Land Economics, University of Wisconsin Press, vol. 77(3), pages 399-422.
    10. Mark Hoffmann & Andrew Worthington & Helen Higgs, 2006. "Urban water demand with fixed volumetric charging in a large municipality: the case of Brisbane, Australia ," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 50(3), pages 347-359, September.
    11. Mary E. Renwick & Sandra O. Archibald, 1998. "Demand Side Management Policies for Residential Water Use: Who Bears the Conservation Burden?," Land Economics, University of Wisconsin Press, vol. 74(3), pages 343-359.
    12. Arjan Ruijs, 2009. "Welfare and Distribution Effects of Water Pricing Policies," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 43(2), pages 161-182, June.
    13. Castro-Rodriguez, Fidel & Da-Rocha, Jose Maria & Delicado, Pedro, 2002. "Desperately Seeking Theta's: Estimating the Distribution of Consumers under Increasing Block Rates," Journal of Regulatory Economics, Springer, vol. 22(1), pages 29-58, July.
    14. Ruijs, A. & Zimmermann, A. & van den Berg, M., 2008. "Demand and distributional effects of water pricing policies," Ecological Economics, Elsevier, vol. 66(2-3), pages 506-516, June.
    15. Antonio Musolesi & Mario Nosvelli, 2007. "Dynamics of residential water consumption in a panel of Italian municipalities," Applied Economics Letters, Taylor & Francis Journals, vol. 14(6), pages 441-444.
    16. Massimiliano Mazzanti & Anna Montini, 2006. "The determinants of residential water demand: empirical evidence for a panel of Italian municipalities," Applied Economics Letters, Taylor & Francis Journals, vol. 13(2), pages 107-111.
    17. Kayaga, Sam & Calvert, John & Sansom, Kevin, 2003. "Paying for water services: effects of household characteristics," Utilities Policy, Elsevier, vol. 11(3), pages 123-132, September.
    18. Nelson, Julie A, 1993. "Household Equivalence Scales: Theory versus Policy?," Journal of Labor Economics, University of Chicago Press, vol. 11(3), pages 471-493, July.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Maria A. García-Valiñas & Roberto Martínez-Francisco & González-Gómez, 2010. "Water affordability: alternativem measurement and explanatory Factors in Andalusia," Centre for Water Economics, Environment and Policy Papers 1014, Centre for Water Economics, Environment and Policy, Crawford School of Public Policy, The Australian National University.
    2. Henrique Monteiro, 2010. "Residential Water Demand in Portugal: checking for efficiency-based justifications for increasing block tariffs," Working Papers Series 1 ercwp0110, ISCTE-IUL, Business Research Unit (BRU-IUL).
    3. Schleich, Joachim & Hillenbrand, Thomas, 2009. "Determinants of residential water demand in Germany," Ecological Economics, Elsevier, vol. 68(6), pages 1756-1769, April.
    4. Mónica Maldonado-Devis & Vicent Almenar-Llongo, 2021. "A Panel Data Estimation of Domestic Water Demand with IRT Tariff Structure: The Case of the City of Valencia (Spain)," Sustainability, MDPI, vol. 13(3), pages 1-26, January.
    5. María Ángeles García-Valiñas & Sara Suárez-Fernández, 2022. "Are Economic Tools Useful to Manage Residential Water Demand? A Review of Old Issues and Emerging Topics," Post-Print hal-04067487, HAL.
    6. Renzetti, Steven & Dupont, Diane P. & Chitsinde, Tina, 2015. "An empirical examination of the distributional impacts of water pricing reforms," Utilities Policy, Elsevier, vol. 34(C), pages 63-69.
    7. David Hoyos & Alaitz Artabe, 2017. "Regional Differences in the Price Elasticity of Residential Water Demand in Spain," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 31(3), pages 847-865, February.
    8. Joachim Schleich & Thomas Hillenbrand, 2019. "Residential water demand responds asymmetrically to rising and falling prices," Applied Economics, Taylor & Francis Journals, vol. 51(45), pages 4973-4981, September.
    9. Milan Ščasný & Šarlota Smutná, 2021. "Estimation of price and income elasticity of residential water demand in the Czech Republic over three decades," Journal of Consumer Affairs, Wiley Blackwell, vol. 55(2), pages 580-608, June.
    10. Ming-Feng Hung & Bin-Tzong Chie & Tai-Hsin Huang, 2017. "Residential water demand and water waste in Taiwan," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 19(2), pages 249-268, April.
    11. Darío F. Jiménez & Sergio A. Orrego & Felipe A. Vásquez & Roberto D. Ponce, 2017. "Estimating water demand for urban residential use using a discrete-continuous model and disaggregated data at the household level: the case of the city of Manizales, Colombia," Lecturas de Economía, Universidad de Antioquia, Departamento de Economía, issue 86, pages 153-178, Enero - J.
    12. Schleich, Joachim & Hillenbrand, Thomas, 2019. "Water demand responds asymmetrically to rising and falling prices," Working Papers "Sustainability and Innovation" S03/2019, Fraunhofer Institute for Systems and Innovation Research (ISI).
    13. Maria A. Garcia-Valiñas & Wasantha Athukorala & Clevo Wilson & Benno Torgler & Robert Gifford, 2014. "Nondiscretionary residential water use: the impact of habits and water-efficient technologies," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 58(2), pages 185-204, April.
    14. Lucia Cecchi & Enrico Conti & Letizia Ravagli, 2022. "The determinants of domestic water demand and the equity of tariffs: Empirical evidence from an Italian municipality," ECONOMIA PUBBLICA, FrancoAngeli Editore, vol. 2022(3), pages 373-395.
    15. Ming-Feng Hung & Bin-Tzong Chie, 2013. "Residential Water Use: Efficiency, Affordability, and Price Elasticity," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 27(1), pages 275-291, January.
    16. Dinusha Dharmaratna & Edwyna Harris, 2012. "Estimating Residential Water Demand Using the Stone-Geary Functional Form: The Case of Sri Lanka," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 26(8), pages 2283-2299, June.
    17. Fernando Arbués & Inmaculada Villanúa & Ramón Barberán, 2010. "Household size and residential water demand: an empirical approach ," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 54(1), pages 61-80, January.
    18. Arbues, Fernando & Garcia-Valinas, Maria Angeles & Martinez-Espineira, Roberto, 2003. "Estimation of residential water demand: a state-of-the-art review," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 32(1), pages 81-102, March.
    19. Marie-Estelle Binet & Fabrizio Carlevaro & Michel Paul, 2014. "Estimation of Residential Water Demand with Imperfect Price Perception," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 59(4), pages 561-581, December.
    20. Giulia Romano & Nicola Salvati & Andrea Guerrini, 2014. "Factors Affecting Water Utility Companies’ Decision to Promote the Reduction of Household Water Consumption," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 28(15), pages 5491-5505, December.

    More about this item

    Keywords

    residential water tariffs; affordability; Stone-Geary utility function; water price regulation;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • Q21 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Demand and Supply; Prices
    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:een:cweanu:1005. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: CAP Web Team (email available below). General contact details of provider: https://edirc.repec.org/data/asanuau.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.