Distributional effects of water tariff reforms: An empirical study for Lima, Peru
This study analyzes the affordability and distributional implications of water tariff reforms for poor water customers under means-tested tariffs in comparison to increasing block tariffs (IBTs) using volumetric targeting. For this purpose, we employ a unique data set for Lima, Peru. Our analysis reveals that from a pro-poor perspective, the performance of means-tested tariffs is mixed. On the one hand, they distribute more income to poor households than the IBTs, given the assumption that the overall revenue to the water supplier remains constant. On the other hand, the share of poor customers who actually benefit from water subsidies declines with means-testing. Nevertheless, means-tested tariffs clearly outperform IBTs in terms of excluding non-poor customers from being subsidized. These findings should be generalized with care as the performance of the tariff crucially depends on the cut-off value for cross-subsidies and the block prices chosen under volumetric targeting and on the design of the means-test. Our analysis further suggests that a proper assessment of individual welfare effects should take household size into account and rest on a broad set of affordability and distributional indicators. Interestingly, our results are relatively insensitive to the price elasticity of water demand.
|Date of creation:||2013|
|Date of revision:|
|Contact details of provider:|| Postal: Permoserstraße 15, 04318 Leipzig|
Phone: ++49 - 0341 - 235-2771
Fax: ++49 - 0341 - 235-2825
Web page: http://www.ufz.de/index.php?en=1445
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- AndrÈs GÛmez-Lobo & Dante Contreras, 2003. "Water Subsidy Policies: A Comparison of the Chilean and Colombian Schemes," World Bank Economic Review, World Bank Group, vol. 17(3), pages 391-407, December.
- Kristin Komives & Vivien Foster & Jonathan Halpern & Quentin Wodon, 2005.
"Water, Electricity, and the Poor : Who Benefits from Utility Subsidies?,"
World Bank Publications,
The World Bank, number 6361.
- Kristin Komives & Vivien Foster & Jonathan Halpern & Quentin Wodon & Roohi Abdullah, 2008. "Water, Electricity, and the Poor : Who Benefits from Utility Subsidies?," World Bank Other Operational Studies 11745, The World Bank.
- Nataraj, Shanthi & Hanemann, W. Michael, 2011.
"Does marginal price matter? A regression discontinuity approach to estimating water demand,"
Journal of Environmental Economics and Management,
Elsevier, vol. 61(2), pages 198-212, March.
- Nataraj, Shanthi & Hanemann, W. Michael, 2008. "Does Marginal Price Matter? A Regression Discontinuity Approach to Estimating Water Demand," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt2jc295gr, Department of Agricultural & Resource Economics, UC Berkeley.
- Nataraj, Shanthi & Hanemann, W. Michael, 2008. "Does marginal price matter? : A regression discontinuity approach to estimating water demand," CUDARE Working Paper Series 1077, University of California at Berkeley, Department of Agricultural and Resource Economics and Policy.
- Piet Rietveld & Jan Rouwendal & Bert Zwart, 2000. "Block Rate Pricing of Water in Indonesia: An Analysis of Welfare Effects," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 36(3), pages 73-92.
- Garcia, Serge & Reynaud, Arnaud, 2004. "Estimating the benefits of efficient water pricing in France," Resource and Energy Economics, Elsevier, vol. 26(1), pages 1-25, March.
- Renzetti, Steven, 1992. "Evaluating the welfare effects of reforming municipal water prices," Journal of Environmental Economics and Management, Elsevier, vol. 22(2), pages 147-163, March.
- repec:ebl:ecbull:v:9:y:2007:i:4:p:1-7 is not listed on IDEAS
- Fankhauser, Samuel & Tepic, Sladjana, 2007. "Can poor consumers pay for energy and water? An affordability analysis for transition countries," Energy Policy, Elsevier, vol. 35(2), pages 1038-1049, February.
- Antonio Estache & V. Foster & Q. Wodon, 2002. "Accounting for Poverty in Infrastructure Reform: Learning from Latin America's Experience," ULB Institutional Repository 2013/44108, ULB -- Universite Libre de Bruxelles.
- Céline Nauges & Dale Whittington, 2010.
"Estimation of Water Demand in Developing Countries: An Overview,"
World Bank Research Observer,
World Bank Group, vol. 25(2), pages 263-294, August.
- NAUGES CÃ©line & WHITTINGTON Dale, 2008. "Estimation of Water Demand in Developing Countries: An Overview," LERNA Working Papers 08.20.264, LERNA, University of Toulouse.
- Daouda Diakité & Aggey Semenov & Alban Thomas, 2009.
"A proposal for social pricing of water supply in Côte d'Ivoire,"
- Diakité, Daouda & Semenov, Aggey & Thomas, Alban, 2009. "A proposal for social pricing of water supply in Côte d'Ivoire," Journal of Development Economics, Elsevier, vol. 88(2), pages 258-268, March.
- Kristin Komives & Jon Halpern & Vivien Foster & Quentin Wodon & Roohi Abdullah, 2007. "Utility Subsidies as Social Transfers: An Empirical Evaluation of Targeting Performance," Development Policy Review, Overseas Development Institute, vol. 25(6), pages 659-679, November.
- Ruijs, A. & Zimmermann, A. & van den Berg, M., 2008. "Demand and distributional effects of water pricing policies," Ecological Economics, Elsevier, vol. 66(2-3), pages 506-516, June.
- Olmstead, Sheila M. & Michael Hanemann, W. & Stavins, Robert N., 2007.
"Water demand under alternative price structures,"
Journal of Environmental Economics and Management,
Elsevier, vol. 54(2), pages 181-198, September.
- Komives, Kristin & Halpern, Jonathan & Foster, Vivien & Wodon, Quentin & Abdullah, Roohi, 2006. "The distributional incidence of residential water and electricity subsidies," Policy Research Working Paper Series 3878, The World Bank.
- Whittington, Dale, 1992. "Possible Adverse Effects of Increasing Block Water Tariffs in Developing Countries," Economic Development and Cultural Change, University of Chicago Press, vol. 41(1), pages 75-87, October.
- Bithas, Kostas, 2008. "The sustainable residential water use: Sustainability, efficiency and social equity. The European experience," Ecological Economics, Elsevier, vol. 68(1-2), pages 221-229, December.
- Arjan Ruijs, 2009. "Welfare and Distribution Effects of Water Pricing Policies," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 43(2), pages 161-182, June.
- Soteroula Hajispyrou & Phoebe Koundouri & Panos Pashardes, .
"Household demand and welfare: implications of water pricing in Cyprus,"
DEOS Working Papers
0201, Athens University of Economics and Business.
- Hajispyrou, Soteroula & Koundouri, Phoebe & Pashardes, Panos, 2002. "Household demand and welfare: implications of water pricing in Cyprus," Environment and Development Economics, Cambridge University Press, vol. 7(04), pages 659-685, October.
- Panos Pashardes & Phoebe Koundouri & Soteroula Hajispyrou, . "Household demand and welfare: implications of water pricing in Cyprus," DEOS Working Papers 0202, Athens University of Economics and Business.
- Pashardes, Panos & Koundouri, Phoebe & Hajispyrou, Soteroula, 2002. "Household Demand and Welfare Implications of Water Pricing in Cyprus," MPRA Paper 38444, University Library of Munich, Germany.
- Diego Angel-Urdinola & Quentin Wodon, 2007. "Do Utility Subsidies Reach the Poor? Framework and Evidence for Cape Verde, Sao Tome, and Rwanda," Economics Bulletin, AccessEcon, vol. 9(4), pages 1-7.
When requesting a correction, please mention this item's handle: RePEc:zbw:ufzdps:142013. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (ZBW - German National Library of Economics)
If references are entirely missing, you can add them using this form.