Economic parameters of water demand management for domestic

論文類型	基礎研究	發表日期	1999-09-01
作者	Hu,Lianqi
摘要	Following a summary of the water demand management in urban China relating to domestic water consumption, details are given of the price and income elasticity of demand for efficient urban water resource use, together with a generalized demand equation of

Economic parameters of water demand management for domestic use in urban China[II]

8. THE DEMAND EQUATION

International experience has shown that water demand is a function of price when household incomes and other variables that influence price are constant. As price increases, the quantity demanded at the given price will decrease, consumers will adjust themselves customary for water consumption depends on the signal of price. The demand curve slope goes downward to the right because consumers are ready to consume more water if the price is lower. As noted previously, price elasticity of demand can be expressed by the formula:

That is,

And also, the any point elasticities in the curve

Then

P = P1
So, the equation of demand can be expressed as:

An urban water demand model has been developed based on this equation of demand. It can show willingness-to-pay for an amount consumed and provides a demand curve after modification for loss of water supply. Assuming the average tariff of domestic could be increased to 0.90 yuan/m3 in 1998 and by 10 percent annual increments in next eight years, 15 percent of loss of water supply considered, 4 percent annual increment in household incomes, 3 percent annual inflation, 2 percent of population served increment. Thus, total demand for domestic would not exceed 1997 levels until the year 2004. The demand curves for different households vs. years are shown at Figure. 3, 4.

Figure 3 Demand Curve 1997

Figure 4 Demand Curve for Domestic Use

Table 4 Projected Water Demand for Domestic

year	Household income	Domestic consumption LCD	Average Tariff (1997 onstant）	I_e	P_e
1997	1550	134.50	0.55	0.74	-0.18
1998	1612	125.00	0.87	0.73	-0.26
1999	1677	129.65	0.85	0.73	-0.25
2000	1744	125.03	1.07	0.73	-0.29
2001	1814	129.81	1.04	0.72	-0.29
2002	1886	134.73	1.01	0.72	-0.28
2003	1962	128.77	1.27	0.72	-0.33
2004	2040	133.79	1.24	0.71	-0.32
2005	2122	138.96	1.20	0.71	-0.32
2006	2207	144.27	1.17	0.70	-0.31
2007	2295	136.80	1.47	0.70	-0.36

Table 4 Projected Water Demand for Domestic (Cont‘d)

year	Population served (100 million）	Average Tariff 1997 constant (yuan/m³)	Annual Water demand （100 million m³）	Household Income (yuan/month)	Of income on tariff
1997	2.22	0.55	109	1550	0.46%
1998	2.27	0.87	104	1612	0.65%
1999	2.33	0.85	110	1676	0.63%
2000	2.39	1.07	109	1744	0.74%
2001	2.45	1.04	116	1813	0.71%
2002	2.51	1.01	124	1886	0.69%
2003	2.58	1.27	121	1961	0.80%
2004	2.65	1.24	130	2040	0.78%
2005	2.73	1.20	138	2121	0.76%
2006	2.81	1.17	148	2206	0.73%
2007	2.89	1.47	144	2294	0.84%

The findings indicated water demand for domestic use would not exceed 1997 levels until the year 2000 if water demand is managed well. If the population served increases to 289 million by the year 2007, that is, a 30 percent increase from 1997, domestic water supply will only rise 330 million m3, or 32 percent from 1997 and the tariff in the same period will rise by 167 percent; the tariff expenditure on the household income is still less than 1 percent even though it rises 1.83 times calculated with comparable 1997 prices. In comparison with international experience, the adjusted tariff expenditures on income are still at a low level. To ensure the financial sustainability of the water supply industry and promote the economically efficient use of water, the pricing strategy must provide appropriate price signals to consumers to promote the efficient use of water and conservation practices, but that is affordable for consumers in practice.

Economic parameters of water demand management for domestic use in urban China[III]