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Über dieses Buch

This book arose out of a paper that I wrote for the World Bank at the request of Ariel Dinar, the editor for the series in which this volume appears. I began that paper by pointing to the growing importance of demand-side considerations in water resources: "The provision of potable water is one of government's oldest functions with evidence of this activity stretching back thousands of years. During much of that time, water demands were taken as exogenously given and the principle task of authorities was defined as an engineering one: how to supply a given quantity of water at least cost. In recent years, however, concerns have arisen from observations of excessive water use, degraded water quality and continued inadequate service for many, especially the very poor. As a result of these and other concerns, there is a growing effort to view water resource allocation from a perspective that incorporates consumers' preferences along with supply constraints into management plans. " (Renzetti, 2000, p. 123). The purpose of this volume is to examine, in greater detail than was possible in that article, what is known regarding the economic characteristics of the demand for water. Thus, this book is meant to be an extended critical review of the state of the art.

Inhaltsverzeichnis

Frontmatter

Introduction

Chapter 1. Introduction

Abstract
For the person who is reading this book on a hot, sunny day, there is little need to explain the importance of water and the value of understanding the relationship between water use and economic influences. For all other readers, consider the following points:
  • A sample of women who live in the slums of Dhaka report that they require an average of 3 hours each day to convey their household's water from public wells and pipes to their homes (Chowdry, 1999)
  • The annual amount of water available per person in 1990 ranged from 100,000 m3 in Canadai to 400 m3 in Israel (Dinar and Subramanian, 1997).
  • The global demand for freshwater for human consumption has increased almost tenfold while population has increased only by a factor of 3.5 during the 20th century (Biswas, 1997; OECD, 1998).
  • Costanza et al. (1997) estimates that approximately 82% of the total ecosystem value stems from the services provided by water or wetlands. Most of this value is not reflected in market transactions.
Steven Renzetti

Chapter 2. The State of Water Use

Abstract
The previous chapter set out the reasons why the demand for water is an important topic for study. This chapter begins the process of explaining how to study water demands. The purpose of this chapter, then, is to provide the reader with several types of background information. First, the notion of water ‘use’ is examined. It turns out that human society has many uses of water-some of which require removing water (temporally) from its place in the natural environment and some of which do not. In addition to the variegated nature of water use, there are also different ways to measure water use. These issues are taken up below. Second, data are presented that illustrate the levels and trends in global water use.
Steven Renzetti

Water Demands

Chapter 3. Residential Water Demands

Abstract
The previous chapter demonstrates that there is substantial variation in the quantity of water used by households in different countries and climatic regions. Part of the reason for this variation stems from differing levels of water availability in differing countries. However, a major part of the explanation of differing levels of household water use must be found on the demand side-that is, by examining differences in the factors that are expected to influence households’ water use choices. The purpose of this chapter is to examine the structure of household water demands and to consider what is known regarding the factors that influence those demands. It begins with a brief theoretical treatment of consumer demand. This section is used to learn what direction is provided by theory for the construction of demand models, to identify the variables that can be expected to influence household water demands, and to clarify the types of data needed to estimate the structure of residential water demands. The chapter then turns to a discussion of the estimation of residential water demands. Section 3 provides an overview of the evolution of the empirical residential water demand literature. Section 4 considers the role of prices in determining household water demands and, in particular, examines how the econometric literature has dealt with the issue of defining the price of water when households are confronted with complex price schedules.
Steven Renzetti

Chapter 4. Commercial and Industrial Water Demands

Abstract
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. The chapter then discusses the estimation of commercial and industrial water demands and reports on what is known regarding price and output elasticities. While this chapter has the same basic structure and coverage as the preceding one, there are some topics that are specific to industrial water demands. In particular, this chapter considers the definition of the price of water when firms are self-supplied, the use of programming models to represent industrial water demands and the role of water recycling.
Steven Renzetti

Chapter 5. Agricultural Water Demands

Abstract
The purpose of this chapter is to present and discuss the major lines of research related to water use at the farm-level. In contrast to the case of industrial water use, there has been an enormous amount of attention paid to the economic characteristics of agricultural water use and effluent flows from agricultural operations. In addition to the primary literature concerned with modeling agricultural water demands, there are also a number of surveys (Carruthers and Clark, 1981; Caswell, 1991; Just, 1991; Boggess, Lacewell and Zilberman, 1993; Zilberman and Lipper, 1999). Furthermore, there are journals devoted to the topic (Advances in Irrigation, Agricultural Water Management) and other journals such as American Journal of Agricultural Economics and Journal of Agricultural and Resource Economics that devote a significant amount of space to it.
Steven Renzetti

Chapter 6. The Demand for Sewage Disposal and Waste Assimilation

Abstract
The purpose of this chapter is to examine what is known regarding households’ and firms’ demand for wastewater disposal. Of particular interest is the extent to which research has demonstrated that water disposal decisions are sensitive to market conditions and economic instruments. While there has been a very substantial amount of research conducted by engineers and scientists concerning the chemical and biological features of wastewater and its treatment (cf. the journals Waste Management, Water Resources Research and others), there has been relatively little attention paid by economists.
Steven Renzetti

Chapter 7. Water Demands in Low-Income Countries

Abstract
Nowhere is the need to understand the structure of water demands and to use this information to rationalize water management greater than in low-income countries. Recall from chapter 2 that water demands in many low-income countries (including those that are already considered to have inadequate supplies) are growing rapidly. The following quotations are indicative of the magnitude and severity of the problems that exist:
  • The challenge is enormous: one billion people still lack access to safe water, two billion lack safe sanitation. Slow progress is not acceptable, as more than three million children still die every year from avoidable water-related disease. (World Bank Water Supply and Sanitation web-site, March 1, 2000, http://www.worldbank.org/html/fpd/water/).
  • Dirty water has become the world’s most dangerous killer. At least twenty-five thousand people die every day from the use of it…Diarrhea alone kills at least 4.6 million young children every year. About 200 million people are victims of schistosomiasis caused by contaminated water on the skin. Five hundred million have trachoma, one of the main causes of blindness because of dirty dishwater. About half of the people living in developing countries do not have safe drinking water (La Jornada, 1992, p. 17).
  • It is estimated that at least 25% of rural water supplies in developing countries are not working, and in some countries, construction of new facilities is not even keeping pace with the rate of failure (Mu, Whittington and Briscoe, 1990, p. 522).
Steven Renzetti

The Value of Water Use

Chapter 8. Value of Water in Extractive Uses

Abstract
Every student of economics learns of the seemingly paradoxical values of water and diamonds. The purpose of this exercise is to illustrate the relationship between scarcity and value and to introduce students to marginal analysis. There is, however, another lesson to be learned from that example that rarely is discussed. The value of a diamond is a function of its physical properties, the use to which it is to be put and a variety of other factors. A sophisticated global market digests all of this information to determine the diamond’s value.
Steven Renzetti

Chapter 9. Value of Water in Non-Extractive Uses

Abstract
This chapter has the same structure and purpose as the preceding chapter but its attention is directed at examining the value of water employed in non-extractive uses. Examples of this type of use are the production of hydroelectricity, transportation, recreation, and the use of water to support aquatic life and perform other ecological functions. In addition, households may also have non-use values associated with water such as the aesthetic values associated with being in proximity to water or the desire to preserve the option of future use for themselves or their children.
Steven Renzetti

Water Demand Management

Chapter 10. Water Demand Management

Abstract
Until fairly recently, society’s efforts to regulate and apportion water flows have focused exclusively on issues related to the supply of water. That is, the primary concern was with the delivery of potable water or the provision of water-related services (for example, hydroelectricity or canals for barge traffic) at least cost in order to meet the needs of water users. The underlying assumption in this approach was that these “needs” were exogenously determined constants and not sensitive to policy measures available to government. (Easter, Feder, Le Moigne and Duda, 1993; Baumann and Boland, 1998; Cosgrove and Rijsberman, 2000). By the mid-point of the last century, however, economic researchers had begun to criticize this supply-side orientation. For example, in the context of examining water-related investment decisions, Hirschleifer, De Haven and Milliman (1960) conclude,
Perhaps the most important of these [errors of fact or of reasoning] might be simple oversight: that, when the total of water use begins to approach system capacity, administrators simply do not think of attempting to make better use of existing supplies as an alternative to initiating new construction. The possibility of adjusting prices does not often occur to those responsible… Of course, rationing water use by raising prices across the board, or by eliminating discrimination benefiting certain classes of use, has its cost, but it is a cost which should be properly analyzed against the alternative of new construction, (p. 360).
Steven Renzetti

Chapter 11. Water Demand Forecasting

Abstract
The purpose of this chapter is to examine the use of information regarding the structure of water demands for forecasting purposes. Boland (1997) provides the following definition of forecasting: “Forecasting the level of any future activity, such as water use, can be divided into two tasks: (1) explanation and (2) prediction. Explanation of water use usually takes the form of a model that relates the past observed level of water use to various variables. Replacing past values of the explanatory variables with those expected in the future produces a prediction of future water use. This forecast is conditioned on several levels of assumptions including the accuracy of the water use model, the applicability of that model to the future, and the accuracy of postulated future values for explanatory variables.” (pp. 162–3).
Steven Renzetti

Conclusions

Chapter 12. Conclusions

Abstract
In chapter 1, it was indicated that the purpose of this book is to contribute to decision-making regarding water resource allocations by presenting and critically assessing what is known regarding water demands. It is now time to summarize what has been learnt and to point to the most significant gaps in our knowledge.
Steven Renzetti

Backmatter

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