Selected Empirical Analyses
New Horizons in Environmental Economics series
Edited by Phoebe Koundouri
Chapter 5: Estimating urban water demands: a dynamic approach
María A. García-Valiñas INTRODUCTION Throughout the ages, water has been considered one of the most important natural resources in making the development of civilization possible, and its availability has conditioned the location of economic activity (Marshall, 1879; Gibbons, 1986). At the same time, water is a scarce good (Winpenny, 1994). Conﬂicts over this natural resource have caused competition among alternative uses or among regions. In those situations, supplies cannot meet demands, so it is necessary to design policies to allocate water eﬃciently. Since the 1970s, a tendency towards using demand-side policies may be observed, at the cost of increasing productive capacity to satisfy growing demands (Herrington, 1995). In this sense, the analysis of the users’ preferences constitutes a key element to be considered in water management processes. This study has focused on estimating water demand in an urban context. In spite of the fact that urban water demand is not the most important consumption use, it is the one that has most substantially increased (MMA, 2001). This rising trend is explained by several factors, such as population and income growth or changes in consumption habits. Thus, there is no doubt that urban demands are spreading and urban supply has priority over other uses. Speciﬁcally, the most relevant users in an urban context have been analysed. These are residential and commercial/industrial consumers supplied by the urban network. Studies that have simultaneously produced estimates for both types of users are still scarce (Williams and Suh, 1986;...
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