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The role of economic instruments for environmental management: water charges in the Paraiba do Sul river basin

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  • José Gustavo Féres

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    (Instituto de Pesquisa Económica Aplicada)

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    Abstract

    This paper examines the factors influencing manufacturing firms´ water reuse decision and analyzes whether the structure of intake water demand differs between firms that adopt water reuse practices and those which do not. The first stage of the estimation model involves a Probit analysis of the water reuse decision and the second stage employs an endogenous switching regression to estimate the intake water demand equations. Results suggest that water charges may act as an effective mechanism in inducing firms to undertake water reuse investments and in reducing intake water demand. Estimates of the water demand price elasticities indicates that plants that reuse water are more sensitive to water price increases than plants without access to reuse technologies.

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    Bibliographic Info

    Paper provided by Latin American and Caribbean Environmental Economics Program in its series Working Papers with number 200702.

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    Length: 20 pages
    Date of creation: Jun 2007
    Date of revision: Jun 2007
    Handle: RePEc:lae:wpaper:200702

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