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Estimation of the effects of price and billing frequency on household water demand using a panel of Wisconsin municipalities

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  • Steven Andrew Fenrick
  • Lullit Getachew

Abstract

A demand function of residential water consumption is developed from a 1997 to 2006 panel of 200 Wisconsin water utilities. A double-log functional form is assumed and parameters are estimated using a random effects model. The results suggest that the price is inelastic yet negative and statistically significant and this elasticity response grows stronger as the marginal price level is increased. Additionally, the model reveals water savings due to monthly billing and also the annual water savings from technology adoption.

Suggested Citation

  • Steven Andrew Fenrick & Lullit Getachew, 2012. "Estimation of the effects of price and billing frequency on household water demand using a panel of Wisconsin municipalities," Applied Economics Letters, Taylor & Francis Journals, vol. 19(14), pages 1373-1380, September.
    • Handle: RePEc:taf:apeclt:v:19:y:2012:i:14:p:1373-1380
    DOI: 10.1080/13504851.2011.629977
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    References listed on IDEAS

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    1. 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.
    2. S. Gaudin, 2006. "Effect of price information on residential water demand," Applied Economics, Taylor & Francis Journals, vol. 38(4), pages 383-393.
    3. 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.
    4. 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.
    5. Ellen M. Pint, 1999. "Household Responses to Increased Water Rates during the California Drought," Land Economics, University of Wisconsin Press, vol. 75(2), pages 246-266.
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    1. 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.
    2. Jordi Honey-Rosés & Claudio Pareja, 2019. "Metrics and Methods for Comparing Water Utility Rate Structures," Water Economics and Policy (WEP), World Scientific Publishing Co. Pte. Ltd., vol. 5(02), pages 1-31, April.
    3. 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.
    4. Saeed Ghavidelfar & Asaad Y. Shamseldin & Bruce W. Melville, 2017. "A Multi-Scale Analysis of Single-Unit Housing Water Demand Through Integration of Water Consumption, Land Use and Demographic Data," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 31(7), pages 2173-2186, May.

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