Estimating the benefits of efficient water pricing in France

Serge Garcia and Arnaud Reynaud
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Arnaud Reynaud: LERNA - Economie des Ressources Naturelles - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - INRA - Institut National de la Recherche Agronomique - CEA - Commissariat à l'énergie atomique et aux énergies alternatives

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Abstract: The purpose of this paper is to evaluate the pricing of French water utilities. An econometric model describing both water supply and demand is specified and estimated on utilities located in the Bordeaux area. Based on the estimated technology and demand parameters, we simulate marginal-cost pricing (first-best pricing) and social surplus variations. We find a significant difference between observed marginal prices and marginal costs. We show that the optimal pricing scheme is characterized, first by higher marginal prices and second by a lower fixed charge. However, moving towards efficient prices does not result in important direct welfare effects.

Keywords: WATER UTILITY; GMM ESTIMATION; PANEL DATA (search for similar items in EconPapers)
Date: 2004
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Citations: View citations in EconPapers (45)

Published in Resource and Energy Economics, 2004, 26 (1), pp.1-25. ⟨10.1016/j.reseneeco.2003.05.001⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-02682580

DOI: 10.1016/j.reseneeco.2003.05.001

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