Skip to main content

Price Responsiveness of Industrial and Commercial Water Demand

Buy Chapter:

$17.00 plus tax (Refund Policy)

The economics of water demand in different sectors is a matter of interest for water resource planners and policy makers. Empirical studies on the demand for water, however, are substantially less abundant in developing countries. The NWSDB in Sri Lanka categorises water users into residential and non-residential (industrial, commercial, schools, religious institutions and shipping). Industrial and commercial classes constitute the major water consuming sectors of non-residential users and are considered for demand analyses in this chapter. Industrial and commercial water consumption accounted for approximately 10 per cent of the total water produced by the NWSDB and contributed 22 per cent of the total revenue in 2005 (NWSDB, 2005). The industrial and commercial water withdrawals are expected to increase in the future, both in terms of quantity and proportion of total water withdrawals due to increasing levels of economic development. Therefore, the analyses here provide necessary instruments for water authorities to assess variation in consumption of non-residential users and the resulting welfare effects of a price change.

This chapter presents the estimation of the industrial and commercial water demands using panel data on monthly observations of aggregate water use for all the NWSDB districts (14) for 60 months (January 2001 to December 2005) for Sri Lanka. The estimation in this chapter uses two separate models for commercial and industrial consumers, but separate demand models for different industry categories cannot be estimated because of data unavailability. The findings of this chapter reveal that the price elasticities of industrial and commercial demand are inelastic and industrial water users are relatively more elastic than the commercial users. However, the significance of the price of water in industrial and commercial water demand is not as conclusive as the results for residential water demand. Moreover, this chapter presents the analyses of the effects of climatic factors on industrial and commercial water consumption. An additional purpose of industrial and commercial water demand estimation is to use the parameter estimates, along with the findings of chapter 4 and 6 to evaluate the welfare effects of different water pricing scenarios undertaken in chapter 7.
No Reference information available - sign in for access.
No Citation information available - sign in for access.
No Supplementary Data.
No Article Media
No Metrics

Document Type: Research Article

Publication date: 01 January 2011

More about this publication?
  • Access Key
  • Free content
  • Partial Free content
  • New content
  • Open access content
  • Partial Open access content
  • Subscribed content
  • Partial Subscribed content
  • Free trial content
Cookie Policy
Cookie Policy
Ingenta Connect website makes use of cookies so as to keep track of data that you have filled in. I am Happy with this Find out more