An Econometric Estimation of Industrial Water Demand in France

摘要

This study investigates the structure of industrial water demand by estimating the derived demand for water on a sample of industrial establishments located in the south-west of France. Production technologies are represented by short-term variable cost functions and approximated by a translog form. Industrial water use is modeled as having three components: the quantity of water bought to a water utility, the quantity of autonomous water and the quantity of water treated prior to use. We include in this framework water effluents, which are considered as a by-product of the production process, emitted by firms. Each of the three water components is treated as a separate input and all are estimated as a system of simultaneous equations. The model is estimated on a sample of 51 industrial plants in the Gironde district observed from 1994 to 1996 using Seemingly Unrelated Regression (SUR) and Feasible Generalized Least Squares (FGLS). Results of estimations show that industrial firms are sensitive to water price inputs. Network water elasticity is estimated at -0.29. It varies from -0.10 to -0.79 according to the type of industry considered. Autonomous water price elasticity is not significant. Elasticity for treated water is evaluated at -1.42 at the mean-sample and varies from -0.90 to -2.21 according to the industry considered.