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Demand for Piped and Non-piped Water Supply Services: Evidence from Southwest Sri Lanka

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  • Céline Nauges
  • Caroline Berg

Abstract

In 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 service provision. Identification of factors driving piped and non-piped water demand is a necessary prerequisite for predicting how consumers will react to such price increases. Using cross-sectional data of 1,800 households from Southwest Sri Lanka, we estimate water demand functions for piped and non-piped households using appropriate econometric techniques. The (marginal) price elasticity is estimated at − 0.15 for households exclusively relying on piped water, and at − 0.37 for households using piped water but supplementing their supply with other water sources. The time cost elasticity for households relying on non-piped water only is estimated at − 0.06 on average, but varying across sources. For both piped and non-piped households, we find evidence of substitutability between water from different sources. We discuss the implications of these results in terms of pricing policy.
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  • Céline Nauges & Caroline Berg, 2009. "Demand for Piped and Non-piped Water Supply Services: Evidence from Southwest Sri Lanka," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 42(4), pages 535-549, April.
    • Handle: RePEc:kap:enreec:v:42:y:2009:i:4:p:535-549
    DOI: 10.1007/s10640-008-9222-z
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    6. Céline Nauges & Dale Whittington, 2010. "Estimation of Water Demand in Developing Countries: An Overview," The World Bank Research Observer, World Bank Group, vol. 25(2), pages 263-294, August.
    7. Tomas Havranek & Zuzana Irsova & Tomas Vlach, 2018. "Measuring the Income Elasticity of Water Demand: The Importance of Publication and Endogeneity Biases," Land Economics, University of Wisconsin Press, vol. 94(2), pages 259-283.
    8. Cook, Joseph & Wagner, Jake & Newell, Gunnar, 2020. "A Decision Support Tool for Rural Water Supply Planning," EfD Discussion Paper 20-6, Environment for Development, University of Gothenburg.
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    13. Nunoo, Jacob & Koomson, Isaac & Orkoh, Emmanuel, 2015. "Household Deficiency in Demand for Water: Do Water Source and Travel Time Matter?," MPRA Paper 66007, University Library of Munich, Germany.
    14. Costolanski, Peter & Elahi, Raihan & Iimi, Atsushi & Kitchlu, Rahul, 2013. "Impact evaluation of free-of-charge CFL bulb distribution in Ethiopia," Policy Research Working Paper Series 6383, The World Bank.
    15. Rajapakshe, Sisira & Termansen, Mette & Paavola, Jouni, 2022. "Valuing Water Service Improvements through Revealed Preference: Averting Behaviour Method," MPRA Paper 115623, University Library of Munich, Germany.
    16. Whittington, Dale & Nauges, Céline & Fuente, David & Wu, Xun, 2015. "A diagnostic tool for estimating the incidence of subsidies delivered by water utilities in low- and medium-income countries, with illustrative simulations," Utilities Policy, Elsevier, vol. 34(C), pages 70-81.
    17. Caroline Berg & Céline Nauges, 2012. "The willingness to pay for access to piped water: a hedonic analysis of house prices in Southwest Sri Lanka," Letters in Spatial and Resource Sciences, Springer, vol. 5(3), pages 151-166, October.
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    19. Jean-Daniel Rinaudo & Marielle Montginoul & Jean-François Desprats, 2015. "The development of private bore-wells as independent water supplies: challenges for water utilities in France and Australia," Post-Print hal-01290169, HAL.
    20. Jean-Daniel Rinaudo & Marielle Montginoul & Jean-François Desprats, 2015. "The development of private bore-well s as independent water supplies: chall enges for water utilities in France and Australia [Le développement des forages individuels vu comme des sources d'eau au," Post-Print hal-01183835, HAL.
    21. Aina, Ifedotun Victor & Thiam, Djiby Racine & Dinar, Ariel, 2023. "Substitution of piped water and self-supplied groundwater: The case of residential water in South Africa," Utilities Policy, Elsevier, vol. 80(C).

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