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,
Purposes of the ResearchWe 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 elasticityOther determinants of
household water demandThe impact of second houses
tourism
The results will be useful for indication to policy-makers and utilities managers
Elements of interestUse of aggregated data on
domestic water consumptionA large panel data: 240
municipalities for 6 yearsStructural changes such as water
rationing measures and a tariff reform
New variables with respect to previous works:The Tourism dummy variableThe Water Rationing variable
ContextSardinia is a
Mediterranean tourist island characterised by the occurrence of period of water scarcity
Last period of severe drought was in 1999 - 2003
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
Tariff structures
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
2
0 50 100 150 200 250 300 350
Block size in cubic meters
Mar
gina
l pri
ces i
n eu
ros
ESAF CBG SIINOS SIM ABBANOA
Average yearly consumption, 2000-2005
80
155133 142 139 130
0
50
100
150
200
2000 2001 2002 2003 2004 2005
Year
cubi
c met
ers
mc medi annui
Median yearly consumption
70
145126 138 135
121
0
50
100
150
200
2000 2001 2002 2003 2004 2005
Year
cubi
c m
eter
s
mc mediani annui
ContextHigh 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
Static Panel ModelsThe static model is
We compare different approaches:Pooled OLSFixed EffectRandom Effect
ituitYEARitYEARitYEARitYEARitYEARitGOVOSSAIitSIINOSitSIM
itHOURSitSUMEVATRATOURiTOURiTOURPOPOViPOPiALTiNORENOViOWNERSiNLF
iHHSIZEitINCOMEitAPitWATCONLog
)2005(22)2004(21)2003(20)2002(19
)2001(18)(17)(16)(15
)log(14)log(13)4(12
)3(11)2(10)115000(9)5000(8
)log(7)log(6)log(5)log(4
)log(3)log(2)log(10)(
RESULTSRANDOM EFFECT – GLS
INTERCEPT 0.609
AP -0.146***
INCOME 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***
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
-0.6 -0.4 -0.2 0 0.2 0.4 0.6 0.8 1 1.2
AP
INCOME
HHSIZE
NLF
OWNERS
NORENOV
ALT
POP5000
POPOV15000
TOUR2
TOUR3
TOUR4
SUMEVATRA
HOURS
SIM
SIINOS
GOVOSSAI
YEAR 2001
YEAR 2002
YEAR 2003
YEAR 2004
YEAR 2005
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.
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.
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.
Comments (4)A very high presence of
tourists in secondary homes leads to a significant increase in water consumption per user.
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.
Comments (5)
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
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.
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.
VANIA STATZU
Water management in ItalyNational 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
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
After the referendumReferendum 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
What we need:A national water
authorityNational rules on
water managementA system of
benchmarking to achieve a higher level of efficiency
a different roles for municipalities: more power to decide but not a double role
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