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Modeling water demand when households have multiple sources of water
Author(s) -
Coulibaly Lassina,
Jakus Paul M.,
Keith John E.
Publication year - 2014
Publication title -
water resources research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.863
H-Index - 217
eISSN - 1944-7973
pISSN - 0043-1397
DOI - 10.1002/2013wr015090
Subject(s) - price elasticity of demand , elasticity (physics) , economics , population , quality (philosophy) , demand curve , water quality , water pricing , environmental economics , econometrics , water conservation , environmental science , natural resource economics , water resources , microeconomics , ecology , philosophy , materials science , demography , epistemology , sociology , composite material , biology
A significant portion of the world's population lives in areas where public water delivery systems are unreliable and/or deliver poor quality water. In response, people have developed important alternatives to publicly supplied water. To date, most water demand research has been based on single‐equation models for a single source of water, with very few studies that have examined water demand from two sources of water (where all nonpublic system water sources have been aggregated into a single demand). This modeling approach leads to two outcomes. First, the demand models do not capture the full range of alternatives, so the true economic relationship among the alternatives is obscured. Second, and more seriously, economic theory predicts that demand for a good becomes more price‐elastic as the number of close substitutes increases. If researchers artificially limit the number of alternatives studied to something less than the true number, the price elasticity estimate may be biased downward. This paper examines water demand in a region with near universal access to piped water, but where system reliability and quality is such that many alternative sources of water exist. In extending the demand analysis to four sources of water, we are able to (i) demonstrate why households choose the water sources they do, (ii) provide a richer description of the demand relationships among sources, and (iii) calculate own‐price elasticity estimates that are more elastic than those generally found in the literature.