Rationing and Length: The impact of water supply interruptions on residential users

Transcription

1 Crawford School of Economics and Government The Australian National University, 27th October Rationing and Length: The impact of water supply interruptions on residential users María A. García-Valiñas Toulouse School of Economics, INRA-LERNA David Roibás University of Oviedo

2 OUTLINE 1. Aims and motivation 2. Drought in Seville 3. Methodology 4. Empirical analysis (I) Residential water demand function (II) Welfare and rationing 5. Concluding remarks

3 Aims: AIMS AND MOTIVATION Which interruption length is preferred: short or long? Comparing several rationing methods applied during drought periods (welfare analysis): Water supply interruptions Water price increases Motivation: Residential water use: Usually, the main urban water use Urban users as a priority Improvement of previous methodologies Management of urban water demands Water resource value (EWF)

4 DROUGHT IN SEVILLE Analyzed drought period : Water firm (EMASESA) initiatives: Demand Information campaignes Rationing: Supply Water supply interruption (up to 12 hours per day) Firm reorganization New supply sources During drought, we observe a significant reduction of water resource quality

5 METHODOLOGY Demand function with two components: = [ p,y,s;f(c, y) ] = q( p, y,s) f(c, y) Welfare measurement: surplus (inconsistency using compensated variation: Roibas et al. 2007) Supply interruption: Proportional rationing assumption (Tirole, 1990) Prices: Efficient rationing assumption Virtual prices (Tobin y Houthakker,, 1951)

6 METHODOLOGY Scenario 1: Good water resource/service quality P a vp c p g = [ p, y, s; f ( c = 0) ] d [ p, y, s; f ( > 0) ] = c R NR

7 METHODOLOGY Scenario 2: Bad water resource quality P a a pv L vp c p g L R d e = p, y, s; f ( c = 0) L [ ] L = [ p, y, s; f ( c = 0) ] [ p, y, s; f ( > 0) ] L L = c L NR

8 it EMPIRICAL ANALYSIS [ β + β p + β y + β temp + β nper + β qual ] = 0 1 it 2 s l [ 1 + d ( α + α c + α c + α y )] h i t 3 2 t t 3 4 i i 5 t DEPENDENT VARIABLE INDEPENDENT VARIABLES PRICE INTERRUPTION VARIABLES UALITY SOCIOECONOMIC VARIABLES it : household water consumption per quarter P it-2 : two-lagged average price c s t: Total hours of interruption, when (marginal) cuts are equal or lower than 6 hours per day ( short cut ) c l t: Total hours of interruption, when (marginal) cuts are higher than 6 hours per day ( long cut ) qual t : dummy: 1= low quality; 0=otherwise y i : income index nper i : number of people per household CLIMATIC VARIABLES temp t : average of maximun temperatures

9 Panel data: EMPIRICAL ANALYSIS 208 Sevillian households (individual metering) Period: 1991(4)-2000(3) Variable Units Mean Stan. Dev. Max. Min. m p Euros/m y Euros/household 2, , , temp Celsius Degrees n Persons/House c day Hours: Minutes 4:50 2:03 7:00 0:40

10 EMPIRICAL ANALYSIS Residential water demand function: results Parameter Coeficient α *** α 1 (c s ) *** α 2 (c l ) *** α 3 (y) *** β *** β 1 (p) *** β 2 (y) β 3 (temp) *** β 4 (nper) *** β 5 (qual) *** R

11 EMPIRICAL ANALYSIS Welfare and rationing UAL=0 UAL=1 c s(=223) c l(=545) c s(223) c l=(545) NR p vp vp q W c W p W L

12 CONCLUDING REMARKS Methodological contribution: Residential demand function Analyzing several rationing systems Virtual prices: information about willigness to pay for water without restrictions. Short interruptions more efective/efficient than long interruptions: Short interruptions are preferred to achieve the targeted reduction in consumption, minimizing the total time of interruption. Useful information to design water policies during drought periods.

13 Thank you for your attention