Price Responsiveness of Residential, Industrial and Commercial Water Demand in Sri Lanka

Appropriate pricing of water is critical for improving the efficiency of pipe-borne water supply systems in developing countries. This paper estimates the demand for pipe-borne water for residential, industrial and commercial sectors in Sri Lanka. Price elasticity for residential consumers ranges fr...

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Bibliographic Details
Published in:The Asia Pacific journal of economics & business 2011-12, Vol.15 (2), p.17
Main Authors: Dharmaratna, Dinusha, Parasnis, Jaai
Format: Article
Language:English
Subjects:
Central banks
Consumers
Consumption
Demand
Developing countries
Drinking water
Elasticity of demand
Industrialized nations
LDCs
Literature reviews
Policy making
Price elasticity
Price increases
Pricing policies
Sanitation
Studies
Subsidies
Water supply
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Summary:Appropriate pricing of water is critical for improving the efficiency of pipe-borne water supply systems in developing countries. This paper estimates the demand for pipe-borne water for residential, industrial and commercial sectors in Sri Lanka. Price elasticity for residential consumers ranges from -0.06 to -0.58 and the income elasticity varies from 0.04 to 0.13. For the industrial and commercial sectors, price is not a significant variable in determining water demand. These findings suggest that price increases may not substantially reduce the demand for water. This paper provides the empirical foundations for pipe-borne water planning and policy-making in developing countries. [PUBLICATION ABSTRACT]
ISSN:1326-8481