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Modelling residential water demand with fixed volumetric charging in a large urban municipality: The case of Brisbane, Australia

Author

Listed:
  • Mark Hoffman
  • Andrew Worthington
  • Helen Higgs

    (School of Economics and Finance, Queensland University of Technology)

Abstract

This paper uses household level data to model residential water demand in Brisbane, Australia from 1998 to 2004. In this system, residential consumption is charged using a fixed annual service fee with no free entitlement and a fixed volumetric charge per kilolitre. Water demand is specified as quarterly household water consumption and demand characteristics include the contemporaneous and lagged marginal price of water, household income and size, and the number of rainy (with at least some precipitation) and warm (greater than 19.5°C) days. The findings not only confirm residential water as price and income inelastic, but also that the price and income elasticity of demand in owner-occupied households is higher than in renter households. However, the results also show that weather, especially the number of warm days, is likely to exert a much greater influence on residential water consumption than any factors subject to the usual demand management strategies.

Suggested Citation

  • Mark Hoffman & Andrew Worthington & Helen Higgs, 2005. "Modelling residential water demand with fixed volumetric charging in a large urban municipality: The case of Brisbane, Australia," School of Economics and Finance Discussion Papers and Working Papers Series 196, School of Economics and Finance, Queensland University of Technology.
  • Handle: RePEc:qut:dpaper:196
    as

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    File URL: http://external-apps.qut.edu.au/business/documents/discussionPapers/2005/No%20196%20-%20Hoffman%20Worthington%20and%20%20Higgs.pdf
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    References listed on IDEAS

    as
    1. Mary E. Renwick & Sandra O. Archibald, 1998. "Demand Side Management Policies for Residential Water Use: Who Bears the Conservation Burden?," Land Economics, University of Wisconsin Press, vol. 74(3), pages 343-359.
    2. Graeme Dandy & Tin Nguyen & Carolyn Davies, 1997. "Estimating Residential Water Demand in the Presence of Free Allowances," Land Economics, University of Wisconsin Press, vol. 73(1), pages 125-139.
    3. R. Martínez-Espiñeira, 2003. "Estimating Water Demand under Increasing-Block Tariffs Using Aggregate Data and Proportions of Users per Block," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 26(1), pages 5-23, September.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Hughes, Neal & Hafi, Ahmed & Goesch, Tim & Brownlowe, Nathan, 2008. "Urban water management: optimal price and investment policy under uncertainty," 2008 Conference (52nd), February 5-8, 2008, Canberra, Australia 6005, Australian Agricultural and Resource Economics Society.
    2. Neal Hughes & Ahmed Hafi & Tim Goesch, 2009. "Urban water management: optimal price and investment policy under climate variability ," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 53(2), pages 175-192, April.

    More about this item

    Keywords

    Residential water demand; two-part tariffs; fixed volumetric charge; demand management strategies;

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