Next Article in Journal
Ontario’s Clean Water Act and Capacity Building: Implications for Serviced Rural Municipalities
Next Article in Special Issue
Is the Achievement of “Good Status” for German Surface Waters Disproportionately Expensive?—Comparing Two Approaches to Assess Disproportionately High Costs in the Context of the European Water Framework Directive
Previous Article in Journal / Special Issue
Using Ostrom’s DPs as Fuzzy Sets to Analyse How Water Policies Challenge Community-Based Water Governance in Colombia
Article Menu
Issue 7 (July) cover image

Export Article

Open AccessArticle
Water 2017, 9(7), 533; https://doi.org/10.3390/w9070533

The Limits of Water Pricing in a Developing Country Metropolis: Empirical Lessons from an Industrial City of Pakistan

1
School of Business, University of Queensland, Brisbane, Queensland 4072, Australia
2
Department of Geography, University of Delaware, Newark, DE 19716, USA
3
Faculty of Environmental Sciences, Wageningen University, Wageningen 6700–6709, The Netherlands
4
Leadership for Environment & Development (LEAD), Islamabad 44000, Pakistan
*
Authors to whom correspondence should be addressed.
Received: 10 May 2017 / Revised: 9 July 2017 / Accepted: 14 July 2017 / Published: 18 July 2017
(This article belongs to the Special Issue Water Economics and Policy)
View Full-Text   |   Download PDF [1663 KB, uploaded 18 July 2017]   |  

Abstract

This paper seeks to question the effectiveness of water pricing as a means of consumer behavioural change in urban centres of the Global South by analysing the domestic usage for water in a major industrial city of Pakistan. Using survey data of 1100 households from Faisalabad city, we estimate the price and income elasticities of water demand. Instrumental variable methods are applied to overcome the endogeneity issues of water pricing. The findings reflect that price and income elasticities vary across different groups. Price elasticities range from −0.43 to −0.71, and income elasticities vary between 0.01 and 0.12. These findings suggest that pricing policies may have limited scope to drive households’ water consumption patterns. However, these empirics may suggest that policy makers should design an appropriate tariff structure to increase revenues that can be invested to further improve the existing water infrastructure. The study findings also suggest that non-pricing instruments, such as water saving campaigns, may be helpful in driving an efficient use of water in rapidly growing cities in the developing world. View Full-Text
Keywords: filtered vs. unfiltered water; household survey; demand elasticity; instrumental variable approach; bootstrapping methods; Pakistan; sustainable development goals filtered vs. unfiltered water; household survey; demand elasticity; instrumental variable approach; bootstrapping methods; Pakistan; sustainable development goals
Figures

Figure 1

This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. (CC BY 4.0).
SciFeed

Share & Cite This Article

MDPI and ACS Style

Ahmad, S.; Ali, S.H.; Mirza, M.U.; Lotia, H. The Limits of Water Pricing in a Developing Country Metropolis: Empirical Lessons from an Industrial City of Pakistan. Water 2017, 9, 533.

Show more citation formats Show less citations formats

Note that from the first issue of 2016, MDPI journals use article numbers instead of page numbers. See further details here.

Related Articles

Article Metrics

Article Access Statistics

1

Comments

[Return to top]
Water EISSN 2073-4441 Published by MDPI AG, Basel, Switzerland RSS E-Mail Table of Contents Alert
Back to Top