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A proposal for social pricing of water supply in Côte d'Ivoire

Author

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  • Daouda Diakité

    (TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique, LERNA - Economie des Ressources Naturelles - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - INRA - Institut National de la Recherche Agronomique - CEA - Commissariat à l'énergie atomique et aux énergies alternatives)

  • Aggey Semenov

    (NUS - National University of Singapore)

  • Alban Thomas

    (LERNA - Economie des Ressources Naturelles - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - INRA - Institut National de la Recherche Agronomique - CEA - Commissariat à l'énergie atomique et aux énergies alternatives, TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique)

Abstract

We consider the design of a nonlinear social tariff for residential water in Côte d'Ivoire, which is a case of a monopolistic private operator supplying a population of heterogeneous consumers. The proposed optimal tariff includes an initial "social" block with a low unit price, and higher consumption blocks with a monopoly pricing rule. This optimal nonlinear tariff is calibrated using econometric estimates of a panel-data residential water demand equation. Welfare changes associated with moving from the actual tariff to approximations of the optimal pricing system are computed under different tariff scenarios. We find that gains in consumer welfare would outweigh losses in producer surplus in a majority of Ivorian local communities.

Suggested Citation

  • Daouda Diakité & Aggey Semenov & Alban Thomas, 2009. "A proposal for social pricing of water supply in Côte d'Ivoire," Post-Print hal-01243467, HAL.
    • Handle: RePEc:hal:journl:hal-01243467
    DOI: 10.1016/j.jdeveco.2008.03.003
    Note: View the original document on HAL open archive server: https://hal.univ-reunion.fr/hal-01243467
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    2. Dalton, Christina M., 2014. "Estimating demand elasticities using nonlinear pricing," International Journal of Industrial Organization, Elsevier, vol. 37(C), pages 178-191.
    3. Henrique Monteiro, 2010. "Residential Water Demand in Portugal: checking for efficiency-based justifications for increasing block tariffs," Working Papers Series 1 ercwp0110, ISCTE-IUL, Business Research Unit (BRU-IUL).
    4. 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.
    5. Sağlam, Yiğit, 2011. "Optimal Pricing of Water: Optimal Departures from the Inverse Elasticity Rule," Working Paper Series 18553, Victoria University of Wellington, School of Economics and Finance.
    6. SaÄŸlam, YiÄŸit, 2011. "Optimal Pricing of Water: Optimal Departures from the Inverse Elasticity Rule," Working Paper Series 1533, Victoria University of Wellington, School of Economics and Finance.
    7. Li, Yao & Fan, Jin & Zhao, Dingtao & Wu, Yanrui & Li, Jun, 2016. "Tiered gasoline pricing: A personal carbon trading perspective," Energy Policy, Elsevier, vol. 89(C), pages 194-201.
    8. Fuente, David & Kabubo-Mariara, Jane & Kimuyu, Peter & Mwaura, Mbutu & Whittington, Dale, 2017. "Assessing the Performance of Alternative Water and Sanitation Tariffs: The Case of Nairobi, Kenya," EfD Discussion Paper 17-21, Environment for Development, University of Gothenburg.
    9. Céline Nauges & Dale Whittington, 2010. "Estimation of Water Demand in Developing Countries: An Overview," The World Bank Research Observer, World Bank, vol. 25(2), pages 263-294, August.
    10. Yerushalmi, Erez, 2012. "Measuring the administrative water allocation mechanism and agricultural amenities," Economic Research Papers 270633, University of Warwick - Department of Economics.
    11. William F. Vásquez & Pallab Mozumder & Dina Franceschi, 2015. "Water Quality, Household Perceptions and Averting Behavior: Evidence from Nicaragua," Water Economics and Policy (WEP), World Scientific Publishing Co. Pte. Ltd., vol. 1(04), pages 1-21, December.
    12. Simon Porcher, 2014. "Efficiency and equity in two-part tariffs: the case of residential water rates," Applied Economics, Taylor & Francis Journals, vol. 46(5), pages 539-555, February.
    13. Rui Fragoso & Carlos Marques, 2013. "The Economic Impact of Alternative Water Pricing Policies in Alentejo Region," CEFAGE-UE Working Papers 2013_02, University of Evora, CEFAGE-UE (Portugal).
    14. Kertous, Mourad & Zerzour, Sahad, 2015. "To pay or not to pay? Water bill and delay in payment in Bejaia (Algeria): A duration analysis," MPRA Paper 67801, University Library of Munich, Germany.
    15. Fuente, David, 2019. "The design and evaluation of water tariffs: A systematic review," Utilities Policy, Elsevier, vol. 61(C).
    16. Meran Georg & von Hirschhausen Christian, 2017. "Increasing Block Tariffs in the Water Sector – An Interpretation in Terms of Social Preferences," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 17(3), pages 1-24, July.
    17. David R. Bell & Ronald C. Griffin, 2011. "Urban Water Demand with Periodic Error Correction," Land Economics, University of Wisconsin Press, vol. 87(3), pages 528-544.
    18. Zhisong Chen & Keith C.K. Cheung & Manyi Tan, 2019. "Inter-Basin Water Transfer Supply Chain Coordination with Ramsey Pricing," IJERPH, MDPI, vol. 16(19), pages 1-22, September.
    19. Barde, Julia Alexa & Lehmann, Paul, 2013. "Distributional effects of water tariff reforms: An empirical study for Lima, Peru," UFZ Discussion Papers 14/2013, Helmholtz Centre for Environmental Research (UFZ), Division of Social Sciences (ÖKUS).

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    More about this item

    Keywords

    Residential Water Supply; Multi-block tariff; Residential water supply; Revue AERES; Social pricing; Keys Words : Multiblock tariff; Social Pricing;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water

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