Nondiscretionary Residential Water Use: The Impact of Habits and Water‐Efficient Technologies

20 Pages Posted: 3 Apr 2014

See all articles by Maria Angeles Garcia-Valiñas

Maria Angeles Garcia-Valiñas

University of Oviedo

Wasantha Athukorala

University of Peradeniya - Department of Economics and Statistics

Clevo Wilson

Queensland University of Technology

Benno Torgler

Queensland University of Technology; CREMA; CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Robert Don Gifford

Oklahoma City University - School of Law; University of Oklahoma - College of Law; U.S. Army JAG School; Department of Justice National Advocacy Center; University of Arkansas - School of Law

Date Written: April 2014

Abstract

Several studies published in the last few decades have demonstrated a low price‐elasticity for residential water use. In particular, it has been shown that there is a quantity of water demanded that remains constant regardless of prices and other economic factors. In this research, we characterise residential water demand based on a Stone‐Geary utility function. This specification is not only theory‐compatible but can also explicitly model a minimum level of consumption not dependent on prices or income. This is described as minimum threshold or nondiscretionary water use. Additionally, the Stone‐Geary framework is used to model the subsistence level of water consumption that is dependent on the temporal evolution of consumer habits and stock of physical capital. The main aim of this study is to analyse the impact of water‐saving habits and water‐efficient technologies on residential water demand, while additionally focusing attention on nondiscretionary uses. This is informed by an empirical application using data from a survey conducted among residents of Brisbane City Council, Australia. The results will be especially useful in the design of water tariffs and other water‐saving policies.

Keywords: conservation economics, demand analysis, water management and policy

Suggested Citation

Garcia-Valiñas, Maria Angeles and Athukorala, Wasantha and Wilson, Clevo and Torgler, Benno and Gifford, Robert Donald, Nondiscretionary Residential Water Use: The Impact of Habits and Water‐Efficient Technologies (April 2014). Australian Journal of Agricultural and Resource Economics, Vol. 58, Issue 2, pp. 185-204, 2014. Available at SSRN: https://ssrn.com/abstract=2419748 or http://dx.doi.org/10.1111/1467-8489.12030

Maria Angeles Garcia-Valiñas (Contact Author)

University of Oviedo ( email )

Campus del Cristo
Oviedo, Asturias 33071
Spain
+34 985104878 (Phone)
+34985104871 (Fax)

Wasantha Athukorala

University of Peradeniya - Department of Economics and Statistics

Peradeniya, 20400
Sri Lanka

Clevo Wilson

Queensland University of Technology ( email )

GPO Box 2434
2 George Street
Brisbane, Queensland 4001
Australia

Benno Torgler

Queensland University of Technology ( email )

GPO Box 2434
2 George Street
Brisbane, Queensland 4001
Australia

CREMA

Gellertstrasse 18
Basel
Zurich, CH 8006
Switzerland

CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Poschinger Str. 5
Munich, DE-81679
Germany

Robert Donald Gifford

Oklahoma City University - School of Law ( email )

2501 N. Blackwelder
Oklahoma City, OK 73106
United States

University of Oklahoma - College of Law ( email )

300 Timberdell Road
Norman, OK 73019
United States

U.S. Army JAG School

United States

Department of Justice National Advocacy Center

950 Pennsylvania Avenue, NW
Washington, DC 20530-0001
United States

University of Arkansas - School of Law ( email )

260 Waterman Hall
Fayetteville, AR 72701
United States

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