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Industrial water demand in Mexico : Econometric analysis and implications for "water management policy".

Abstract : Trying to find the best way to allocate existing water reserves and persuade users to adopt proper conservation practices, this research work deals with the effects water pricing reform in Mexico has produced within the Mexican manufacturing sector, and offers perspectives for the regulation of the use of water. The outline of this thesis starts with a general description of some components of Mexico's water management as well as the current pricing system. It depicts the Mexican hydrological situation and it in a worldwide context. Composed of four chapters, this study presents, in the first two, a general panorama of the evolution of water management in Mexico and a literature review on the very few studies of industrial water demand. It introduces the microeconomic foundation used to characterize the technology of the Mexican manufacturing sector. A Translog cost system is estimated by the Seemingly Unrelated Regression (SUR) procedure, using data from 500 firms of eight industrial sectors in 1994. Cost estimates allow obtaining price elasticities and Morishima Elasticities of Substitution (MES). The result was that industrial water demand is inelastic and slightly reactive to change in water price (elasticity -0.2976). And in the sense of MES, water is a substitute for labor and material. The exercise is completed with the analysis of the water price changes occurred between 1994 and 2003. Finally, different experiments are performed: to evaluate the consistency of the industrial firm distribution regarding availability water zones; to analyze the effect that elasticity on water price has on the volumes of water demanded by firms; and to identify a water demand constraint to define the technical shutdown point of the firm. In a similar manner, a minimal water volume needed is introduced to establish a reduction of subsidies. The results allow infer that, water price as so far defined by scarcity zone is pushing industrialists toward an efficient use of water.
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Contributor : Corinne Schaffner <>
Submitted on : Monday, May 15, 2006 - 11:50:48 AM
Last modification on : Thursday, October 17, 2019 - 8:49:49 AM
Long-term archiving on: : Saturday, April 3, 2010 - 8:13:53 PM


  • HAL Id : halshs-00008624, version 1


Hilda Guerrero Garcia Rojas. Industrial water demand in Mexico : Econometric analysis and implications for "water management policy".. Economics and Finance. Université des Sciences Sociales - Toulouse I, 2005. English. ⟨halshs-00008624⟩



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