Ciência-IUL
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Descrição Detalhada da Comunicação
Are ill-informed residential water consumers less price-responsive?
Título Evento
6th World Congress of Environmental and Resource Economists
Ano (publicação definitiva)
2018
Língua
Inglês
País
Suécia
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Abstract/Resumo
The vast literature estimating residential water demand assumes households are aware of and respond to changes in the tariffs or at least in the average price paid. However, in a framework where consumers face complex tariff schemes, and water bills tend to represent a reduced household expenditure, this awareness cannot be taken by granted. In this paper, we estimate a discrete continuous choice (DCC) model of residential water demand in Portugal that allows price elasticities to change as a function of consumers’ perception of their water bills. A control function approach is added to the DCC model to deal with the potential endogeneity of the perception indicator. We find water demand to be price-inelastic, but less so if consumers’ awareness about the amount they pay is higher. We also provide novel findings on the impact of environmentally-friendly behaviors, rainwater harvesting and availability of alternative water sources.
Agradecimentos/Acknowledgements
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Palavras-chave
residential water demand estimation,perceptions,discrete continuous choice model,control function.