Abstract
The empirical literature on residential water demand employs various data aggregation methods, which depend on whether the aggregation is over consumption, sociodemographic variables, or both. In this study, we distinguish three dataset types—aggregated data, disaggregated data, and semi-aggregated data—to compare the consequences of using a large sample of semi-aggregated data vis-à-vis a small sample of fully disaggregated data on the water price elasticity estimates. We also analyze whether different aggregation levels in the sociodemographic variables affect the water price elasticity estimates when the number of observations is fixed. We employ a discrete-continuous choice model that considers that consumers face an increasing block price structure. Our results demonstrate that the water price elasticities depend upon the level of aggregation of the data used and the sample size. We also find that the water price elasticities are statistically different when comparing a large semi-aggregated sample with a small disaggregated sample.
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Notes
Monetary values ($) are represented in Chilean pesos. Exchange rate: 1 USD = $ 700.
Details on the econometric model are shown as supplementary material.
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Funding
ANID PIA/BASAL FB0002: Felipe Vásquez-Lavin, Roberto D. Ponce Oliva, Francisco Fernández Jorquera; ANID/FONDAP/15130015: Water Research Center for Agriculture and Mining (CRHIAM): Roberto D. Ponce Oliva; ANID/FONDAP/15110009: Felipe Vásquez-Lavín.
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All authors contributed to the study conception and design. Material preparation, data collection and analysis were performed by Yarela Flores Arévalo, Roberto D. Ponce Oliva and Francisco Fernández Jorquera. Felipe Vásquez-Lavin wrote the first draft of the manuscript, and all authors commented on previous versions of the manuscript. All authors read and approved the final manuscript.
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Flores Arévalo, Y., Ponce Oliva, R.D., Fernández, F.J. et al. Sensitivity of Water Price Elasticity Estimates to Different Data Aggregation Levels. Water Resour Manage 35, 2039–2052 (2021). https://doi.org/10.1007/s11269-021-02833-3
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DOI: https://doi.org/10.1007/s11269-021-02833-3