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Price and Income Elasticities of Residential Water Demand: Why Empirical Estimates differ

Author

Listed:
  • Jasper M. Dalhuisen

    (Vrije Universiteit Amsterdam)

  • Raymond J.G.M. Florax

    (Vrije Universiteit Amsterdam)

  • Henri L.F.M. de Groot

    (Vrije Universiteit Amsterdam)

  • Peter Nijkamp

    (Vrije Universiteit Amsterdam)

Abstract
This paper presents a meta-analysis of variations in price and income elasticities of residential water demand.Information on the determinants of consumer demand is of pivotal importance for the efficiency and efficacy ofpublic and private policy-making. It is also crucial for effective water demand management. We focus on theapplication of statistical methods to synthesize research results on price and income elasticities of residentialwater demand report in the literature. These techniques are generally referred to as meta-analysis. This type ofanalysis constitutes an adequate tool for explaining why empirical estimates of the price and income elasticity ofresidential water demand vary to such considerable extents. The set of explanatory factors used in themeta-analysis includes variables derived from microeconomic choice theory and moderator variables reflectingdifferences in spatial and temporal dynamics, research design, and statistical quality of the estimates ofpreviously published studies.

Suggested Citation

  • Jasper M. Dalhuisen & Raymond J.G.M. Florax & Henri L.F.M. de Groot & Peter Nijkamp, 2001. "Price and Income Elasticities of Residential Water Demand: Why Empirical Estimates differ," Tinbergen Institute Discussion Papers 01-057/3, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20010057
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    References listed on IDEAS

    as
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    2. Céline Nauges & Alban Thomas, 2000. "Privately Operated Water Utilities, Municipal Price Negotiation, and Estimation of Residential Water Demand: The Case of France," Land Economics, University of Wisconsin Press, vol. 76(1), pages 68-85.
    3. 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.
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    5. Julie A. Hewitt & W. Michael Hanemann, 1995. "A Discrete/Continuous Choice Approach to Residential Water Demand under Block Rate Pricing," Land Economics, University of Wisconsin Press, vol. 71(2), pages 173-192.
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    9. J. Charles Headley, 1963. "The Relation of Family Income and Use of Water for Residential and Commercial Purposes in the San Francisco-Oakland Metropolitan Area," Land Economics, University of Wisconsin Press, vol. 39(4), pages 441-449.
    10. Michael L. Nieswiadomy & David J. Molina, 1989. "Comparing Residential Water Demand Estimates under Decreasing and Increasing Block Rates Using Household Data," Land Economics, University of Wisconsin Press, vol. 65(3), pages 280-289.
    11. Smith, V. Kerry & Kaoru, Yoshiaki, 1990. "What have we learned since hotelling's letter? : A meta-analysis," Economics Letters, Elsevier, vol. 32(3), pages 277-281, March.
    12. Hedges, Larry V., 1997. "The promise of replication in labour economics," Labour Economics, Elsevier, vol. 4(2), pages 111-114, June.
    13. Williams, Martin, 1985. "Estimating urban residential demand for water under alternative price measures," Journal of Urban Economics, Elsevier, vol. 18(2), pages 213-225, September.
    14. V. Kerry Smith & Yoshiaki Kaoru, 1990. "Signals or Noise? Explaining the Variation in Recreation Benefit Estimates," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 72(2), pages 419-433.
    15. Patrick Point, 1993. "Partage de la ressource en eau et demande d'alimentation en eau potable," Revue Économique, Programme National Persée, vol. 44(4), pages 849-862.
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    Cited by:

    1. Gregorio Castro-Rosales & Ramiro Esqueda-Walle, 2021. "Spatial Analysis of Urban Water Use Management in the Northern Border Region of Mexico," International Journal of Business and Management, Canadian Center of Science and Education, vol. 15(11), pages 126-126, July.
    2. 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.
    3. Birgül Çakır Yıldırım & Güliz Karaarslan Semiz, 2019. "Future Teachers’ Sustainable Water Consumption Behavior: A Test of the Value-Belief-Norm Theory," Sustainability, MDPI, vol. 11(6), pages 1-18, March.
    4. Roberto Martínez-Espiñeira, 2007. "An Estimation of Residential Water Demand Using Co-Integration and Error Correction Techniques," Journal of Applied Economics, Taylor & Francis Journals, vol. 10(1), pages 161-184, May.
    5. van den Bergh, Jeroen C.J.M., 2008. "Environmental regulation of households: An empirical review of economic and psychological factors," Ecological Economics, Elsevier, vol. 66(4), pages 559-574, July.
    6. Florax, R.J.G.M., 2002. "Accounting for dependence among study results in Meta-Analysis: methodology and applications to the valuation and use of natural resources," Serie Research Memoranda 0005, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
    7. Basani, Marcello & Isham, Jonathan & Reilly, Barry, 2008. "The Determinants of Water Connection and Water Consumption: Empirical Evidence from a Cambodian Household Survey," World Development, Elsevier, vol. 36(5), pages 953-968, May.
    8. Jasper M. Dalhuisen & Raymond J. G. M. Florax & JHenri L. F. de Groot & Peter Nijkamp, 2003. "Price and Income Elasticities of Residential Water Demand: A Meta-Analysis," Land Economics, University of Wisconsin Press, vol. 79(2), pages 292-308.
    9. Raymond J.G.M. Florax & Henri L.F. de Groot & Ruud A. de Mooij, 2002. "Meta-analysis: A Tool for Upgrading Inputs of Macroeconomic Policy Models," Tinbergen Institute Discussion Papers 02-041/3, Tinbergen Institute.

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    More about this item

    Keywords

    water demand; price elasticity; income elasticity; meta-analysis;
    All these keywords.

    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy

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