Journal
WATER RESOURCES MANAGEMENT
Volume 26, Issue 7, Pages 2057-2068Publisher
SPRINGER
DOI: 10.1007/s11269-012-9998-z
Keywords
Demand elasticity; France; Water pricing; Residential water demand; Simulation
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The case study conducted in this paper looks at residential water pricing from three different points of view. It first describes existing urban water-pricing practices in Southern France, emphasizing that pricing is not yet being used as a tool for providing economic incentives to save water. It then looks at the observed impact of pricing on water consumption, through an econometric analysis of a cross-sectional data set. The analysis suggests that demand, with an estimated price elasticity of -0.2, is not yet very responsive to price variation. A regional water model (300 municipalities) is then developed and used to simulate the potential impact of various water-pricing scenarios on aggregate water demand, aggregate water sales revenue, and consumer surpluses. The results illustrate the trade-offs that have to be made between the search for environmental effectiveness, cost recovery, and equity when implementing complex water-pricing structures such as block rates or seasonal water pricing.
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