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Water markets and demand in Central American cities

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  • STRAND, JON
  • WALKER, IAN
Abstract
We analyse data from sample surveys of water use and prices for households in 17 cities in Central America and Venezuela. In some of the cities, almost all sampled households have tap water, but in others many rely on nontap (‘coping’) sources. Coping households use less than one-fifth as much water as metered tap households do, face average water prices ten times as high, are much poorer, and face substantial water hauling costs. Water demand functions are estimated for metered tap households and coping households separately and jointly. Increasing block rates complicate estimation on metered tap households. Using 2SLS, we find price elasticities of water demand, with respect to both average and marginal water price, of about −0.3, with average price giving the greater partial effect. Coping demand has price elasticity closer to −0.1, and is also negatively affected by increased hauling costs. Estimations on the joint data indicate that the water connection itself explains most of the difference between tap and coping consumption and indicate serious problems in such data pooling.

Suggested Citation

  • Strand, Jon & Walker, Ian, 2005. "Water markets and demand in Central American cities," Environment and Development Economics, Cambridge University Press, vol. 10(3), pages 313-335, June.
    • Handle: RePEc:cup:endeec:v:10:y:2005:i:03:p:313-335_00
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    Cited by:

    1. Strand, Jon, 2012. "Low-level versus high-level equilibrium in public utility services," Journal of Public Economics, Elsevier, vol. 96(1), pages 163-172.
    2. 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.
    3. -, 2015. "La economía del cambio climático en América Latina y el Caribe: paradojas y desafíos del desarrollo sostenible," Libros y Documentos Institucionales, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), number 37310 edited by Cepal.
    4. 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).
    5. NAUGES Céline & VAN DEN BERG Caroline, 2006. "Water Markets, Demand and Cost Recovery for Piped Water Supply Services: Evidence from Southwest Sri Lanka," LERNA Working Papers 06.08.201, LERNA, University of Toulouse.
    6. 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.
    7. 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.
    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. Nauges, Céline & Strand, Jon & Walker, Ian, 2009. "The value of water connections in Central American cities: a revealed preference study," Environment and Development Economics, Cambridge University Press, vol. 14(3), pages 349-370, June.
    10. 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.
    11. Cook, Joseph & Brühl, Johanna & Visser, Martine, 2020. "Distributional Statistics of Municipal Water Use During Cape Town’s Drought: Implications for Affordability, Conservation and Tariff Design," EfD Discussion Paper 20-23, Environment for Development, University of Gothenburg.
    12. 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.
    13. 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.
    14. Oscar Zapata, 2018. "Industrial Wastewater Treatment and Reuse in a Developing Country Context: Evidence at the Firm Level from Ecuador," Water Economics and Policy (WEP), World Scientific Publishing Co. Pte. Ltd., vol. 4(02), pages 1-28, April.
    15. Nauges, Celine & Strand, Jon, 2007. "Estimation of non-tap water demand in Central American cities," Resource and Energy Economics, Elsevier, vol. 29(3), pages 165-182, September.
    16. 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.
    17. Sheila M. Olmstead, 2010. "The Economics of Managing Scarce Water Resources," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 4(2), pages 179-198, Summer.
    18. Dexter V. L. Hunt & Christopher D. F. Rogers, 2014. "A Benchmarking System for Domestic Water Use," Sustainability, MDPI, vol. 6(5), pages 1-26, May.
    19. Alatorre, José Eduardo & Peres Núñez, Wilson & Bárcena Ibarra, Alicia & Samaniego, Joseluis, 2020. "The climate emergency in Latin America and the Caribbean: The path ahead – resignation or action?," Libros de la CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), number 45678 edited by Eclac, May.
    20. Ryan Schweitzer & C. Pezon & Abdul Pinjari & Catarina Fonseca & James R . Mihelcic, 2013. "Household expenditure on water service Financial and economic expenditures of rural and peri-urban households across socio-economic classes and seasons in Burkina Faso," Post-Print hal-02012158, HAL.

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