TY - JOUR
T1 - Exploiting unanticipated change in block rate pricing for water demand elasticities estimation
T2 - Evidence from Indonesian suburban area
AU - Yudhistira, Muhammad Halley
AU - Sastiono, Prani
AU - Meliyawati, Melly
N1 - Funding Information:
This research received funding from the Institute for Economic and Social Research, Universitas Indonesia and Universitas Indonesia Research Publication Grant (PITTA 2017) with grant number 307/UN2.R3.1/HKP.05.00/2017 . This article does not contain any studies with human participants or animals performed by any of the authors. The authors and PT Aetra Air Tangerang were involved in research consultation for the water demand analysis in 2016–2017.
Funding Information:
This research received funding from the Institute for Economic and Social Research, Universitas Indonesia and Universitas Indonesia Research Publication Grant (PITTA 2017) with grant number 307/UN2.R3.1/HKP.05.00/2017. This article does not contain any studies with human participants or animals performed by any of the authors. The authors and PT Aetra Air Tangerang were involved in research consultation for the water demand analysis in 2016?2017.
Publisher Copyright:
© 2020
PY - 2020/10
Y1 - 2020/10
N2 - We exploit sudden changes in the marginal tariff scheme to estimate the price elasticity of water demand using households' and firms' data in Tangerang Regency, a part of the Jakarta Greater Metropolitan Area, where water demand management is imperative due to the city's growing population and industrial activities. A monthly water consumption dataset at the consumer level is used in our study. Using the regression discontinuity in time (RDiT) approach, we find the price elasticity of water demand is −0.32 for household consumers and inelastic to changes in price. In contrast, elasticity for industrial and commercial consumers is −1.16, implying a more elastic response. The results raise concerns that firms substitute for a cheaper water source, endangering the water resources sustainability in the area.
AB - We exploit sudden changes in the marginal tariff scheme to estimate the price elasticity of water demand using households' and firms' data in Tangerang Regency, a part of the Jakarta Greater Metropolitan Area, where water demand management is imperative due to the city's growing population and industrial activities. A monthly water consumption dataset at the consumer level is used in our study. Using the regression discontinuity in time (RDiT) approach, we find the price elasticity of water demand is −0.32 for household consumers and inelastic to changes in price. In contrast, elasticity for industrial and commercial consumers is −1.16, implying a more elastic response. The results raise concerns that firms substitute for a cheaper water source, endangering the water resources sustainability in the area.
KW - Indonesia
KW - Regression discontinuity in time (RDiT)
KW - Urban water
KW - Water demand elasticities
UR - http://www.scopus.com/inward/record.url?scp=85089005418&partnerID=8YFLogxK
U2 - 10.1016/j.wre.2020.100161
DO - 10.1016/j.wre.2020.100161
M3 - Article
AN - SCOPUS:85089005418
SN - 2212-4284
VL - 32
JO - Water Resources and Economics
JF - Water Resources and Economics
M1 - 100161
ER -