By Steven Renzetti (auth.)
This e-book arose out of a paper that I wrote for the realm financial institution on the request of Ariel Dinar, the editor for the sequence during which this quantity seems to be. i started that paper by means of pointing to the turning out to be value of demand-side issues in water assets: "The provision of potable water is one among government's oldest services with facts of this task stretching again hundreds of thousands of years. in the course of a lot of that point, water calls for have been taken as exogenously given and the primary activity of specialists used to be outlined as an engineering one: tips on how to offer a given volume of water at the very least rate. in recent times, despite the fact that, issues have arisen from observations of over the top water use, degraded water caliber and persisted insufficient provider for lots of, specially the very negative. because of those and different matters, there's a becoming attempt to view water source allocation from a standpoint that comes with shoppers' personal tastes in addition to provide constraints into administration plans. " (Renzetti, 2000, p. 123). the aim of this quantity is to check, in better element than used to be attainable in that article, what's recognized concerning the financial features of the call for for water. hence, this booklet is intended to be a longer serious evaluation of the country of the art.
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Extra info for The Economics of Water Demands
Chapter 4 COMMERCIAL AND INDUSTRIAL WATER DEMANDS 1. INTRODUCTION This chapter examines the structure of commercial and industrial water demands. It begins with a brief theoretical treatment of production theory. This section is used to learn what direction is provided by economic theory for the construction of input demand models, to identify the variables that can be expected to influence firms' water demands, and to clarify the types of data needed to estimate the structure of firms' water demands econometrically.
Grebenstein and Field (1979) is the first econometric study to do this. S. manufacturing industry. Two separate prices are used for water: the first is compiled by the American Waterworks Association and represents the average of industrial water prices in each state and the second is from Montanari and Mattern (1975). One limitation related to the first of these price series is that they appear to be based on the prices charged by municipal utilities to industrial water users while most water use by industries in the sample is self-supplied.
These types of results lead Howe (1982) to conclude "The exact interpretation of D, however, and the rationale for the magnitude of its estimated coefficient remain something of a mystery" (p. 716). An alternative to estimating residential water demands using the TaylorNordin price specification and OLS is to adopt an estimation procedure that specifically addresses the endogeneity of the price variable. This can be done by creating an instrumental variable to serve as a proxy for price or by using a two-stage estimation procedure in which price and quantity are simultaneously determined.