6 Jun 2012

Water prices, useless consultants and incentives

At the IWA, I gave a talk on global water tariffs (paper in press), during which time I presented a price elasticity estimate of -0.37 (meaning that a 10% increase in the price of retail water led to a -3.7% decrease in quantity demanded).

Here's the 17 min MP3 of my talk and my slides [PDF]

In my talk I concluded that "prices can have an impact on demand for water," so it was funny when Andrea Moisello presented far more data on water prices and demand in Italy and an estimated elasticity of -0.45 before concluding that "price changes are too weak to have an effect."

First, that's false, by the definition of an elasticity that's not zero. Second, he seemed interested in drawing that conclusion despite the evidence in front of his face.

When I went home that night and told this story to my hosts (Ireland does not currently charge for water), they did not agree with Andrea. "Of course you will use less water if you have to pay for it -- and even less if it's expensive."

Problem solved, so we had beers...

In other presentations, I took these notes:
  • Some people from IBM and CDM gave a sales pitch dressed up as plenary. They claimed that they could manage lots of data. I was more worried that they'd collect lots of data (plus fat fee$) and then mismanage the system and/or fail to consider the importance of institutions and incentives.

  • Someone pointed out that it's cheaper to pay a water/toilet attendant to protect facilities   -- and customers -- from abuse than it is to install new sources. Lifetime budgeting would take the costs of breakage and benefit from staffing (job creation!) into account.

  • A survey of women in Zambia showed that they were more aware of NGOs than local institutions. This is a FAIL, since NGOs spend more money on self-promotion without having a long-term role in the area.