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Demand for piped and non-piped water supply services: evidence from southwest Sri Lanka

Author

Listed:
  • Celine Nauges

    (LERNA - Economie des Ressources Naturelles - UT Capitole - Université Toulouse Capitole - Comue de Toulouse - Communauté d'universités et établissements de Toulouse - INRA - Institut National de la Recherche Agronomique - CEA - Commissariat à l'énergie atomique et aux énergies alternatives)

  • Caroline van den Berg

    (BM = WB - La Banque Mondiale = The World Bank - WBG = GBM - World Bank Group = Groupe Banque Mondiale)

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.

Suggested Citation

  • Celine Nauges & Caroline van den Berg, 2009. "Demand for piped and non-piped water supply services: evidence from southwest Sri Lanka," Post-Print hal-02655330, HAL.
    • Handle: RePEc:hal:journl:hal-02655330
    DOI: 10.1007/s10640-008-9222-z
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    Cited by:

    1. Havranek, Tomas & Irsova, Zuzana & Vlach, Tomas, 2016. "Publication Bias in Measuring the Income Elasticity of Water Demand," MPRA Paper 75247, University Library of Munich, Germany.
    2. Prabath Nishantha Edirisinghe, "undated". "Are All Shifting Cultivators poor? Evidence from Sri Lanka's Dry zones," Working papers 113, The South Asian Network for Development and Environmental Economics.
    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. 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.
    5. Mvangeli Dlamini, Nqobizwe, 2015. "Households' Water Use Demand and Willingness to Pay for Improved Water Services: A Case Study of Semi-Urban Areas in the Lubombo and Lowveld Regions of Swaziland," Research Theses 243464, Collaborative Masters Program in Agricultural and Applied Economics.
    6. Johanna Choumert & N. Eric Kéré & Amandine Loyal Laré-Dondarini, 2016. "A Multi-Level Housing Hedonic Analysis of Water and Sanitation Access," Economics Bulletin, AccessEcon, vol. 36(2), pages 1010-1037.
    7. 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.
    8. 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.
    9. 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.
    10. 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.
    11. Mgwele, Akhona & Girma, Hiywot Menker & Dikgang, Johane, 2021. "Measuring residential water affordability and basic water needs in South Africa," EconStor Preprints 231772, ZBW - Leibniz Information Centre for Economics.
    12. Li, Zhengtao & Hu, Bin, 2018. "Perceived health risk, environmental knowledge, and contingent valuation for improving air quality: New evidence from the Jinchuan mining area in China," Economics & Human Biology, Elsevier, vol. 31(C), pages 54-68.
    13. Anthony Amoah & Peter G. Moffatt, 2021. "Willingness to pay for reliable piped water services: evidence from urban Ghana," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 23(4), pages 805-829, October.
    14. Nauges, Celine & Whittington, Dale, 2017. "Evaluating the Performance of Alternative Municipal Water Tariff Designs: Quantifying the Tradeoffs between Equity, Economic Efficiency, and Cost Recovery," World Development, Elsevier, vol. 91(C), pages 125-143.
    15. Jake Wagner & Joseph Cook & Peter Kimuyu, 2019. "Household Demand for Water in Rural Kenya," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 74(4), pages 1563-1584, December.
    16. 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.
    17. 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.
    18. 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 autonomes : les défis pour les gestionnaires d'eau e," Post-Print hal-01183835, HAL.
    19. 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).
    20. 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.
    21. 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.

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