By R. Maria Saleth, Ariel Dinar
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Extra resources for Satisfying urban thirst: water supply augmentation and pricing policy in Hyderabad City, India, Volumes 23-395
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For those with 10 to 30 percent plinth area in domestic use, the minimum charge is Rs. 1000 and the rates for the two slabs are: Rs. 5 and Rs. b The minimum monthly charges in this category are: Rs. 1000 for industries, Rs. 1500 for multi-storey buildings used for commercial use, and Rs. Source: Government of Andhra Pradesh (1993). Although the lower rates for users in non-MCH areas and higher rates for industrial and commercial units are designed to reflect some equity and ability to pay considerations, the actual results in these respects are only of marginal consequences.
The average price vs. marginal price and the econometric question of simultaneity bias, that overwhelm the residential water demand literature, this study uses a methodology that not only admits the analytical relevance of both prices but also permits the endogenization of the simultaneity issue within the demand model itself. As a result, unlike many past studies, the present one can address the role of price perception simultaneously with the role of the price structure. The methodology accomplishes this by comparing demand functions under the two pricing behaviors on the one hand and by evaluating Page ix the consumption response function that captures the sensitivity of consumption change to price switch on the other hand.
Page 10 Table 4. Structure of Water Supply Tariff, Hyderabad, 1993Consumption CategoryConsumption Slab (cum/month)Rate (Rs/cum)(A) DOMESTIC SUPPLIES 1. 00 2. 00 (2) Temporary Connections for Functions, etc. 00Notes: Besides these consumption based rates, there is also a water connection fee varying from Rs. a These rates apply only to buildings with over 70 percent plinth area in domestic use. For those with 10 to 30 percent plinth area in domestic use, the minimum charge is Rs. 1000 and the rates for the two slabs are: Rs.