The Demand for Water by Single and Group-Metered Households

 This paper has examined water consumption in single and group-metered households. A utility maximizing model was developed in which the marginal price schedule was considered to be approximated by a polynomial function of water consumption. The model was modified to allow for an incentive for group-metered households to consume more water than if they were separately metered. This occurs if households do not expect their own increase in water consumption to be matched by other households sharing the meter, so that part of the marginal cost of water is shifted to other households. Estimates using Western Australian data were, however, unable to detect any significant effect of this kind. Hence no evidence was found for such ‘free-riding’ behaviour. These results should, however, be treated with some caution and it would be useful to apply the model to a more extensive data set with more information about characteristics of households.

Contents:

1. Introduction

2. A Model of Water Demand

3. Empirical Results

4. Conclusions
 

Post Date : 10 Juli 2009