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This study investigates the effect of introducing a fiscally neutral increasing block-rate water budget price structure on residential water demand. We estimate that demand was reduced by at least 18 percent, although the reduction was achieved gradually over more than three years. As intermediate steps the study derives estimates of price and income elasticities that rely only on longitudinal variability. We investigate how different subpopulations responded to the pricing change and find evidence that marginal, rather than average, prices may be driving consumption. Additionally, we derive alternative rate structures that might have been implemented, and assess the estimated demand effects of those rate structures.

Keywords: Block rate pricing ; DCC model ; residential water demand ; water budgets

Subject(s): Demand and Price Analysis

Environmental Economics and Policy

Issue Date: 2014

Publication Type: Conference Paper/ Presentation

PURL Identifier: http://purl.umn.edu/170019

Total Pages: 22

JEL Codes: Q21; Q25; Q28

Record appears in: Agricultural and Applied Economics Association (AAEA) > 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota





Autor: Baerenklau, Kenneth A. ; Schwabe, Kurt ; Dinar, Ariel

Fuente: http://ageconsearch.umn.edu/record/170019?ln=en







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