Water Markets, Demand and Cost Recovery for 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 providing for the service. Yet, the question arises on how consumers will react to such price increases. The authors illustrate the impact of price increases on consumption of piped water through a study of the demand for water of piped and non-piped households using cross-sectional data from 1,800 households in Southwest Sri Lanka. The (marginal) price elasticity is estimated at -0.74 for households exclusively relying on piped water, and at -0.69 for households using piped water but supplementing their supply with other water sources, with no significant differences between income groups. Those households that depend on non-piped water sources have a time cost elasticity (as a proxy for price elasticity) of only -0.06. The authors discuss the implications of these results in terms of pricing policy.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by LERNA, University of Toulouse in its series LERNA Working Papers with number 06.08.201.
Date of creation: Aug 2006
Date of revision:
Other versions of this item:
- Nauges, Celine & van den Berg, Caroline, 2006. "Water markets, demand, and cost recovery for piped water supply services : evidence from Southwest Sri Lanka," Policy Research Working Paper Series 3941, The World Bank.
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Shin, Jeong-Shik, 1985. "Perception of Price When Price Information Is Costly: Evidence from Residential Electricity Demand," The Review of Economics and Statistics, MIT Press, vol. 67(4), pages 591-98, November.
- Nauges, Céline & Strand, Jon & Walker, Ian, 2009.
"The value of water connections in Central American cities: a revealed preference study,"
Environment and Development Economics,
Cambridge University Press, vol. 14(03), pages 349-370, June.
- NAUGES CÃ©line & STRAND Jon, 2006. "The Value of Water Connections in Central American Cities: A Revealed Preference Study," LERNA Working Papers 06.23.216, LERNA, University of Toulouse.
- Pattanayak, Subhrendu K. & van den Berg, Caroline & Yang, Jui-Chen & Van Houtven, George, 2006. "The use of willingness to pay experiments : estimating demand for piped water connections in Sri Lanka," Policy Research Working Paper Series 3818, The World Bank.
- Marcello Basani & Barry Reilly & Jonathan Isham, 2004. "Water Demand and the Welfare Effects of Connection: Empirical Evidence from Cambodia," Middlebury College Working Paper Series 0429, Middlebury College, Department of Economics.
- Strand, Jon & Walker, Ian, 2005. "Water markets and demand in Central American cities," Environment and Development Economics, Cambridge University Press, vol. 10(03), pages 313-335, June.
- S. Gaudin, 2006. "Effect of price information on residential water demand," Applied Economics, Taylor & Francis Journals, vol. 38(4), pages 383-393.
- Heckman, James, 2013.
"Sample selection bias as a specification error,"
Publishing House "SINERGIA PRESS", vol. 31(3), pages 129-137.
- Mansur, Erin T. & Olmstead, Sheila M., 2012.
"The value of scarce water: Measuring the inefficiency of municipal regulations,"
Journal of Urban Economics,
Elsevier, vol. 71(3), pages 332-346.
- Erin T. Mansur & Sheila M. Olmstead, 2007. "The Value of Scarce Water: Measuring the Inefficiency of Municipal Regulations," NBER Working Papers 13513, National Bureau of Economic Research, Inc.
- Mansur, Erin T. & Olmstead, Sheila M., 2006. "The Value of Scarce Water: Measuring the Inefficiency of Municipal Regulations," Working paper 228, Regulation2point0.
- Crane, Randall, 1994. "Water markets, market reform and the urban poor: Results from Jakarta, Indonesia," World Development, Elsevier, vol. 22(1), pages 71-83, January.
- NAUGES CÃ©line & VAN DEN BERG Caroline, 2008. "Household's perception of water safety and hygiene practices : Evidence from Sri Lanka," LERNA Working Papers 08.09.253, LERNA, University of Toulouse.
- 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, vol. 79(2), pages 292-308.
- Gilbert,Christopher L. & Vines,David (ed.), 2006. "The World Bank," Cambridge Books, Cambridge University Press, number 9780521029018, December.
- Nauges, Celine & Strand, Jon, 2007. "Estimation of non-tap water demand in Central American cities," Resource and Energy Economics, Elsevier, vol. 29(3), pages 165-182, September.
- 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.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Maxime MARTY).
If references are entirely missing, you can add them using this form.