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Self-selection bias and manufacturing firms' demand for water recirculation

  • Steven Renzetti

    ()

    (Department of Economics, Brock University)

  • Joel Brueau

    ()

    (Department of Economics, University of Saskatchewan)

  • Michel Villeneuve

    ()

    (Environment Canada)

Relatively little is known of the factors which might influence firms' water recirculation decisions. This paper estimates an econometric model that accounts for potential self-selection bias and considers two facets of firms' recirculation behaviour: first, the discrete decision of whether to recirculate and, second, the decision of how much to recirculate. The model is estimated by applying the Heckman two-stage estimation procedure to data from Environment Canada's Industrial Water Use Survey. In the first stage, long run factors such as relative water scarcity and production technologies are found to influence the decision whether to recirculate water. In the second stage, the imputed prices of intake water and water recirculation as well as the scale of operations are found to influence the choice of the optimal quantity of water to recirculate.

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File URL: ftp://coffee.econ.brocku.ca/RePec/pdf/0902.pdf
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Paper provided by Brock University, Department of Economics in its series Working Papers with number 0902.

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Length: 26 pages
Date of creation: Feb 2009
Date of revision: Feb 2009
Handle: RePEc:brk:wpaper:0902
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  1. Steven Renzetti, 1992. "Estimating the Structure of Industrial Water Demands: The Case of Canadian Manufacturing," Land Economics, University of Wisconsin Press, vol. 68(4), pages 396-404.
  2. Diane Dupont & Steven Renzetti, 2001. "The Role of Water in Manufacturing," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 18(4), pages 411-432, April.
  3. Arnaud Reynaud, 2003. "An Econometric Estimation of Industrial Water Demand in France," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 25(2), pages 213-232, June.
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