Economic Instruments for Water Management: The Case for Industrial Water Pricing

Social Science Series No. 26

Abstract

An econometric analysis is undertaken in order to assess the efficacy of one policy instrument (the price of water) in controlling the quantity of water used by manufacturing firms in Canada. Industrial demands for water are estimated using data from two cross-sectional surveys on manufacturing water use and expenditures conducted by Environment Canada in 1981 and 1986. Single-equation demand functions are estimated in double-log form. The price of water is found to be an important factor in determining the quantity of water used by firms for most industries. Estimated price elasticities for intake water range from -0.500 to -1.202.

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Sustainable Water Management
Environmental Stewardship Branch
Environment Canada
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