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Presentation on theme: "VANIA STATZU and ELISABETTA STRAZZERA"— Presentation transcript:

A Panel Data Analysis of Domestic Water Demand in a Mediterranean Tourist Region: the Case of Sardinia VANIA STATZU and ELISABETTA STRAZZERA In: Economics of Sustainable Tourism (Routledge Critical Studies in Tourism, Business and Management) by Fabio Cerina, Anil Markandya , Michael McAleer,

2 Purposes of the Research
We need more knowledge of the determinants of residential water demand in order to construct policy tools to improve sustainable consumption. In our work we will assess: Price and income elasticity Other determinants of household water demand The impact of second houses tourism The results will be useful for indication to policy-makers and utilities managers

3 Elements of interest Use of aggregated data on domestic water consumption A large panel data: 240 municipalities for 6 years Structural changes such as water rationing measures and a tariff reform New variables with respect to previous works: The Tourism dummy variable The Water Rationing variable

4 Context Different price levels and management practices across municipalities until 2004 A water reform in 2004 (due to National Law 36/94) introduces a unique water utility and a unique water tariff and price Sardinia is a Mediterranean tourist island characterised by the occurrence of period of water scarcity Last period of severe drought was in

5 Tariff structures



8 Context High seasonal fluctuation in the residential consumption due to the high number of tourists lodged not in official structures but in holiday homes rented during summer months Tourists stay mainly in coastal areas No official data on home holidays and on tourist presence at municipal level was available for the period analised

9 Static Panel Models The static model is
We compare different approaches: Pooled OLS Fixed Effect Random Effect

0.163*** HHSIZE 1.141*** NLF -0.281** OWNERS -0.453*** NORENOV 0.154 ALT -0.022** POP5000 0.639* POPOV15000 0.449*** TOUR2 0.095** TOUR3 0.172*** TOUR4 0.250***

11 RANDOM EFFECT – GLS SUMEVATRA 0.108** HOURS 0.045 SIM 0.505*** SIINOS -0.079 GOVOSSAI 0.038 YEAR 2001 0.669*** YEAR 2002 0.532*** YEAR 2003 0.558*** YEAR 2004 0.515*** YEAR 2005 0.470*** N 1440 R-squared 0.63


13 Comments (1) Water demand is inelastic so there will be a little reaction to an increase of price; water is a normal good so consumption will increase along with income In this model, water rationing measures seem to have no influence on consumption. This is most probably due to the fact that households have adopted defensive measures to contrast the restrictions imposed (storage tanks) Utilities dummies take into account differences in management tools, such as billing frequency or tariff structure, which may influence average consumption. In 2005, consumption increases less than in previous years: possible effect of new tariff, but further data should be necessary. Higher values of this variable imply that the climate is less humid and rainy and it is often associated to higher temperature: these conditions induce to consume more water for watering plants Unfortunately, we do not have direct information on the number (and size) of private gardens in the municipalities

14 Comments (2) The “coastalization” process determines new estate development, and relinquishment of old dwellings in the interior country towns and villages. The building typology in coastal areas differs from that of the interior: in particular it is more common that houses are endowed with lawns and gardens, and this will lead to an increase in the demand of water, especially when the climate is hot and dry.

15 Comments (3) Our results seem to support the idea that the life style leads to increasing water consumption: large households and working force, who are more numerous in coastal and sub-coastal towns, consume more water. Home owners consume less than tenants, probably due to the fact that the latter do not receive correct price signals for their consumption behaviour if, as it often is the case, the rent includes the water bill: there is no incentive to avoid waste and to adopt more efficient technology.

16 Comments (4) This has the effect of spuriously inflating the residential demand of water in the most popular tourist towns: when decisions have to be made about the allocation of water among sectors, this will have undesirable distributive effects, since “unofficial” tourist lodges can take advantage of regulations which in shortage periods favour residential uses of water and penalize other sectors. A very high presence of tourists in secondary homes leads to a significant increase in water consumption per user.

17 Comments (5) Average consumption (in cubic meters) of:
Average consumption (in cubic meters) of: no tourist impact low tourist impact intermediate tourist impact high tourist impact 2000 108.83 119.68 129.25 139.74 2001 111.21 122.30 132.09 142.80 2002 110.63 121.66 131.39 142.05 2003 115.32 126.82 136.97 148.08 2004 117.24 128.92 139.24 150.54 2005 113.33 124.63 134.60 145.52

18 Policy Suggestions (1) Tariff structures and price level are useful to manage demand but non price instrument can also influence consumers’ behaviour. Information campaigns on the benefits of inserting flow reducing devices and on efficient water use, could be helpful to induce a more responsible consumers’ behavior.

19 Policy Suggestions (2) Information and financial incentives should be aimed at encouraging the adoption of good practices in landscaping; and to promote grey water collection and treatment systems in resort condominiums, to be used for irrigation in the residential or in the agricultural sector. This would represent a great improvement in the efficiency of the use of the resource, having the twofold effect of decreasing both the demand of water and the sewage discharge. It is well known that water shortages in coastal areas intensify the use of water wells in agriculture, so aggravating the process of salinization and desertification of coastal land.

20 Water management in Italy : before and after recent referenda

21 Water management in Italy
Problems: The double role of majors in ATOs and in public utilities The problem of public owned corporations as in house utilities The ATOs abolishment Absence of a national authority Absence of a coherent legislative framework after 1994 National Law 36/1994 Water property shift from private to public Water management at hidrographic basin level: ATOs One water utility for basin In house, public owned corporation, public companies and mixed systems Full Cost Recovery Principle for tariffs



24 After the referendum Referendum stopped the attempt to force public owned corporations to assign shares to public companies Contracts are quite long: no changes in management situation immediately At the moment, situation is quite confusing and Italy required a new water framework law: now municipalities can choose in house utilities but nothing is clear about public owned corporation, mixed situation and private companies Referendum eliminate the capital cost recovery of 7% imposed by law Investments may be stopped without an agreement to keep previous agreement

25 What we need: ATOs or not ATOs: this is the problem!
Promote public-private agreements to finance investments Project financing ecc. Debate on the role of tariff systems A national water authority National rules on water management A system of benchmarking to achieve a higher level of efficiency a different roles for municipalities: more power to decide but not a double role

26 Thank you for your attention!


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