Séminaire UMR 6308 AMURE

With Maria A. Garcia-Valiñas, University of Oviedo | UNIOVI · Department of Economics

• Abstract :

In the current context of pressure on available water resources, sustainable patterns of water consumption emerge as an important matter of concern. In this sense, efficient consumption is usually understood as the optimal usage of the available resources. Thus, we study households’ efficiency levels by considering a stochastic frontier analysis of the demand for water services using a representative sample of a northern city in Spain. Besides, efficient consumption habits require a costly acquisition of accurate information, whether in terms of prices or the effective demand of a given resource. Thus, we also study the impact of several determinants on the efficiency levels of water demand. These range from the deviations between perceived and real prices to self-reported water-saving habits or household size. We find strong evidence in favour of higher efficiency levels among better-informed households, with better water-saving habits and few members. The relevance of this research to the current state of the empirical literature is threefold: first, it develops a micro-founded model which justifies the inclusion of an inefficiency term in the estimation of a Stone-Geary demand function for water with an increasing-block tariff (IBT); second, it expands the number of scarce stochastic frontiers analyses of residential water demand; third, it contributes to a better understanding of the importance of accurate information on optimal decisions of consumers. Moreover, we use a novel and exclusive database for a representative sample of households in the city of Gijón (Spain) between 2017 and 2021, where we combine real data on water prices and consumption with consumer perceptions obtained from a survey. Authors: Balado-Naves, R., García-Valiñas, M.A. and Roibás D.