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Analysing industrial water demand in India: An input distance function approach

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Author Info
Kumar, Surender () (National Institute of Public Finance and Policy)

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Abstract

This study investigates the water demand of Indian manufacturing plants. It adopts an input distance function approach and approximates it by a translog form. Duality between cost function and input distance function is exploited to retrieve information concerning substitutability and the shadow price of water. The model is estimated, using linear programming approach, on a sample of 92 firms over the three years. The results show that the average shadow price of water is rupees 7.21 per kilolitre and the price elasticity of derived demand for water is high, -1.11 on average, a value similar to what has been found by other researchers working on developing countries (for example, China and Brazil). This indicates that water charges may be an effective instrument for water conservation.

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File URL: http://www.nipfp.org.in/working_paper/wp04_nipfp_012.pdf
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Publisher Info
Paper provided by National Institute of Public Finance and Policy in its series Working Papers with number 12.

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Length: 28
Date of creation: Mar 2004
Date of revision:
Handle: RePEc:npf:wpaper:12

Note: Working Paper 12, 2004
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Web page: http://www.nipfp.org.in/working_paper/

For technical questions regarding this item, or to correct its listing, contact: (S.Siva Chidambaram).

Related research
Keywords: Input distance function Industrial water demand Translog form water Price elasticity

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Find related papers by JEL classification:
C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data
D20 - Microeconomics - - Production and Organizations - - - General
Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water

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  1. Arbues, Fernando & Garcia-Valinas, Maria Angeles & Martinez-Espineira, Roberto, 2003. "Estimation of residential water demand: a state-of-the-art review," The Journal of Socio-Economics, Elsevier, vol. 32(1), pages 81-102, March. [Downloadable!] (restricted)
  2. Grosskopf, S. & Hayes, K. & Hirschberg, J., 1995. "Fiscal stress and the production of public safety: A distance function approach," Journal of Public Economics, Elsevier, vol. 57(2), pages 277-296, June. [Downloadable!] (restricted)
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This page was last updated on 2008-8-28.

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