The determinants of domestic water demand and the equity of tariffs: Empirical evidence from an Italian municipality

Titolo Rivista ECONOMIA PUBBLICA
Autori/Curatori Lucia Cecchi, Enrico Conti, Letizia Ravagli
Anno di pubblicazione 2022 Fascicolo 2022/3
Lingua Inglese Numero pagine 23 P. 373-395 Dimensione file 210 KB
DOI 10.3280/EP2022-003002
Il DOI è il codice a barre della proprietà intellettuale: per saperne di più clicca qui

Qui sotto puoi vedere in anteprima la prima pagina di questo articolo.

Se questo articolo ti interessa, lo puoi acquistare (e scaricare in formato pdf) seguendo le facili indicazioni per acquistare il download credit. Acquista Download Credits per scaricare questo Articolo in formato PDF

Anteprima articolo

FrancoAngeli è membro della Publishers International Linking Association, Inc (PILA)associazione indipendente e non profit per facilitare (attraverso i servizi tecnologici implementati da CrossRef.org) l’accesso degli studiosi ai contenuti digitali nelle pubblicazioni professionali e scientifiche

Since the seventies, an increasing block tariff regime (IBT) for water services has been in force in Italy to prevent water from being wasted and to ensure that all citizens can access an essential amount of water at low prices. This article describes an empirical analysis, based on an original household-level administrative data- base from an Italian municipality, that has three objectives: i) to verify the assump- tions underlying the IBT by estimating the main determinants of water demand, ii) to assess equity and affordability of the tariff in force, iii) to evaluate the effects of alternative tariffs, which take into account the household size and provide a sub- sistence minimum free of charge, and of subsidies targeted to families with limited means. The main results show a basically inelastic demand with respect to price and income, a regressive effect of the current water tariff and a significant propor tion of families at risk of affordability, particularly among single and larger house- holds. Alternative tariff methods would not be able to improve the equity of the system because the relationship between consumption and income is too weak. Only effective subsidies targeted to families with limited means can make a difference.

Keywords:water demand, price and income elasticity, tariffs, distributive effects, affordability

Jel codes:Q25, Q21, H23

  1. Arbués F., Garcıa-Valiñas M. Á., Martınez-Espiñeira R. (2003). Estimation of resi- dential water demand: a state-of-the-art review. The Journal of Socio-Economics, 32(1): 81-102.
  2. Arbués F., Barberán R., Villanúa I. (2000). Water price impact on Residential Water Demand in the city of Zaragoza, a Dynamic panel data approach. In 40th Euro- pean Congress of the European Regional Studies Association in Barcelona, Spain (pp. 30-31).
  3. Armeni C. (2008). The right to water in Italy. International Environmental Law Re- search Centre Briefing Paper, 1.
  4. Clarke A. J., Colby B. G., Thompson G. D. (2017). Household water demand sea- sonal elasticities: a stone-geary model under an increasing block rate structure. Land Economics, 93(4): 608-630.
  5. Contreras D., Gómez-Lobo A., Palma I. (2018). Revisiting the distributional impacts of water subsidy policy in Chile: a historical analysis from 1998-2015. Water Policy, 20(6): 1208-1226.
  6. Dalhuisen J. M., Florax R. J., De Groot H. L., Nijkamp P. (2003). Price and income elasticities of residential water demand: a meta-analysis. Land economics, 79(2): 292-308. DOI: 10.2307/3146872
  7. Danesi L., Passarelli M., Peruzzi P. (2007). Water services reform in Italy: its im- pacts on regulation, investment and affordability. Water Policy, 9(1): 33-54.
  8. Ennis S., Deller D. (2019). Water Sector Ownership and Operation: An evolving international debate with relevance to proposals for nationalisation in Italy. Reg- ulating Water: principles & recommendations for an efficient system.
  9. Fuente D. (2019). The design and evaluation of water tariffs: A systematic review. Utilities Policy, 61, 100975.
  10. Garcia‐Valiñas M. A., Athukorala W., Wilson C., Torgler B., Gifford R. (2014). Nondiscretionary residential water use: the impact of habits and water‐efficient technologies. Australian Journal of Agricultural and Resource Economics, 58(2): 185-204. DOI: 10.1111/1467-8489.12030
  11. Ghavidelfar S., Shamseldin A. Y., Melville B. W. (2017). A multi-scale analysis of single-unit housing water demand through integration of water consumption, land use and demographic data. Water resources management, 31(7): 2173- 2186.
  12. Hoyos D., Artabe A. (2017). Regional differences in the price elasticity of residential water demand in Spain. Water Resources Management, 31(3): 847-865.
  13. Klein B., Kenney D., Lowrey J., Goemans C. (2007). Factors influencing residential water demand: a review of the literature. Unpublished paper, Colorado State Uni- versity, January.
  14. Martínez Moscoso A., Aguilar Feijó V. G., Verdugo Silva T. (2018). The vital minimum amount of drinking water required in Ecuador. Resources, 7(1): 15.
  15. Martins R., Quintal C., Cruz L., Barata E. (2016). Water affordability issues in de- veloped countries – The relevance of micro approaches. Utilities policy, 43: 117-123.
  16. Martins R., Fortunato A. (2007). Residential water demand under block rates – a Portuguese case study. Water policy, 9(2): 217-230.
  17. Massarutto A. (2020). Servant of too many masters: Residential water pricing and the challenge of sustainability. Utilities Policy, 63, 101018.
  18. Massarutto A. (2015). Water pricing in Italy: Beyond full-cost recovery. In Water pricing experiences and innovations (pp. 201-230). Springer, Cham.
  19. Massarutto A., Paccagnan V., Linares E. (2008). Private management and public finance in the Italian water industry: A marriage of convenience?. Water Re- sources Research, 44(12). DOI: 10.1029/2007WR006443
  20. Mazzanti M., Montini A. (2006). The determinants of residential water demand: em- pirical evidence for a panel of Italian municipalities. Applied Economics Letters, 13(2): 107-111. DOI: 10.1080/13504850500390788
  21. Mazzanti M., Montini A. (2003). Analisi econometrica della domanda di acqua per usi domestici Applicazioni di modelli panel a dati comunali dell’Emilia Roma- gna e della Lombardia. Atti Convegno SIEP Diritti, Regole, Mercato. Pavia, Uni- versità, 3-4 Ottobre 2003.
  22. Miniaci R., Scarpa C., Valbonesi P. (2008). Measuring the affordability of basic public utility services in Italy. Giornale degli economisti e annali di economia, 185-230.
  23. Mundlak Y. (1978). On the pooling of time series and cross section data. Econometrica: Journal of the Econometric Society, 69-85. DOI: 10.2307/1913646
  24. Musolesi A., Nosvelli M. (2007). Dynamics of residential water consumption in a panel of Italian municipalities. Applied Economics Letters, 14(6): 441-444. DOI: 10.1080/13504850500425642
  25. Musolesi A., Nosvelli M. (2004). Domanda e stili di consumo, dell’acqua domestica: un’analisi econometrica su dati Panel comunali. Economia delle fonti di energia e dell’ambiente.
  26. Nauges C., Whittington D. (2017). Evaluating the performance of alternative mu- nicipal water tariff designs: Quantifying the tradeoffs between equity, economic efficiency, and cost recovery. World Development, 91, 125-143.
  27. Nauges C., Thomas A. (2000). Privately operated water utilities, municipal price negotiation, and estimation of residential water demand: The case of France. Land Economics, 68-85. DOI: 10.2307/3147258
  28. OECD (2015). The Governance of Water Regulators, OECD Studies on Water. Paris: OECD Publishing.
  29. Reynaud A., Romano G. (2018). Advances in the economic analysis of residential water use: An introduction. Water, 10(9), 1162.
  30. Reynaud A. (2016). Assessing the impact of full cost recovery of water services on European households. Water Resources and Economics, 14: 65-78.
  31. Romano G., Salvati N., Guerrini A. (2014). Estimating the determinants of residen- tial water demand in Italy. Water, 6(10): 2929-2945.
  32. Schleich J., Hillenbrand T. (2009). Determinants of residential water demand in Ger- many. Ecological economics, 68(6): 1756-1769.
  33. Schoengold K., Zilberman D. (2014). The economics of tiered pricing and cost func- tions: Are equity, cost recovery, and economic efficiency compatible goals?. Wa- ter Resources and Economics, 7: 1-18.
  34. Sebri M. (2014). A meta-analysis of residential water demand studies. Environment, development and sustainability, 16(3): 499-520.
  35. Strazzera E. (2006). Application of the ML Hausman approach to the demand of water for residential use: heterogeneity vs two-error specification (No. 200604). Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
  36. Tanverakul S. A., Lee J. (2012). Historical review of US residential water demand. In World Environmental and Water Resources Congress 2012: Crossing Bound- aries (pp. 3122-3136). DOI: 10.1061/9780784412312.313
  37. Vanhille J., Goedemé T., Penne T., Van Thielen L., Storms B. (2018). Measuring water affordability in developed economies. The added value of a needs-based approach. Journal of Environmental Management, 217:, 611-620.
  38. Watkins K. (2006). Human Development Report 2006-Beyond scarcity: Power, pov- erty and the global water crisis. UNDP Human Development Reports (2006).
  39. World Health Organization (2017). Guidelines for drinking-water quality: first addendum to the fourth edition.
  40. Worthington A. C., Hoffman M. (2008). An empirical survey of residential water demand modelling. Journal of Economic Surveys, 22(5): 842-871.

Lucia Cecchi, Enrico Conti, Letizia Ravagli, The determinants of domestic water demand and the equity of tariffs: Empirical evidence from an Italian municipality in "ECONOMIA PUBBLICA " 3/2022, pp 373-395, DOI: 10.3280/EP2022-003002