VANIA STATZU and ELISABETTA STRAZZERA In: Economics of Sustainable Tourism (Routledge Critical Studies in Tourism, Business and Management) by Fabio Cerina,

VANIA STATZU and ELISABETTA STRAZZERA

In: Economics of Sustainable

Tourism (Routledge Critical

Studies in Tourism, Business and

Management) by

Fabio Cerina, Anil Markandya ,

Michael McAleer,

Purposes of the ResearchWe need more knowledge of

the determinants of residential water demand in order to construct policy tools to improve sustainable consumption. In our work we will assess:

Price and income elasticityOther determinants of

household water demandThe impact of second houses

tourism

The results will be useful for indication to policy-makers and utilities managers

Elements of interestUse of aggregated data on

domestic water consumptionA large panel data: 240

municipalities for 6 yearsStructural changes such as water

rationing measures and a tariff reform

New variables with respect to previous works:The Tourism dummy variableThe Water Rationing variable

ContextSardinia is a

Mediterranean tourist island characterised by the occurrence of period of water scarcity

Last period of severe drought was in 1999 - 2003

Different price levels and management practices across municipalities until 2004

A water reform in 2004 (due to National Law 36/94) introduces a unique water utility and a unique water tariff and price

Tariff structures

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

2

0 50 100 150 200 250 300 350

Block size in cubic meters

Mar

gina

l pri

ces i

n eu

ros

ESAF CBG SIINOS SIM ABBANOA

Average yearly consumption, 2000-2005

80

155133 142 139 130

0

50

100

150

200

2000 2001 2002 2003 2004 2005

Year

cubi

c met

ers

mc medi annui

Median yearly consumption

70

145126 138 135

121

0

50

100

150

200

2000 2001 2002 2003 2004 2005

Year

cubi

c m

eter

s

mc mediani annui

ContextHigh seasonal fluctuation in

the residential consumption due to the high number of tourists lodged not in official structures but in holiday homes rented during summer months

Tourists stay mainly in coastal areas

No official data on home holidays and on tourist presence at municipal level was available for the period analised

Static Panel ModelsThe static model is

We compare different approaches:Pooled OLSFixed EffectRandom Effect

ituitYEARitYEARitYEARitYEARitYEARitGOVOSSAIitSIINOSitSIM

itHOURSitSUMEVATRATOURiTOURiTOURPOPOViPOPiALTiNORENOViOWNERSiNLF

iHHSIZEitINCOMEitAPitWATCONLog

)2005(22)2004(21)2003(20)2002(19

)2001(18)(17)(16)(15

)log(14)log(13)4(12

)3(11)2(10)115000(9)5000(8

)log(7)log(6)log(5)log(4

)log(3)log(2)log(10)(

RESULTSRANDOM EFFECT – GLS

INTERCEPT 0.609

AP -0.146***

INCOME 0.163***

HHSIZE 1.141***

NLF -0.281**

OWNERS -0.453***

NORENOV 0.154

ALT -0.022**

POP5000 0.639*

POPOV15000 0.449***

TOUR2 0.095**

TOUR3 0.172***

TOUR4 0.250***

RANDOM EFFECT – GLS

SUMEVATRA 0.108**

HOURS 0.045

SIM 0.505***

SIINOS -0.079

GOVOSSAI 0.038

YEAR 2001 0.669***

YEAR 2002 0.532***

YEAR 2003 0.558***

YEAR 2004 0.515***

YEAR 2005 0.470***

N 1440

R-squared 0.63

-0.6 -0.4 -0.2 0 0.2 0.4 0.6 0.8 1 1.2

AP

INCOME

HHSIZE

NLF

OWNERS

NORENOV

ALT

POP5000

POPOV15000

TOUR2

TOUR3

TOUR4

SUMEVATRA

HOURS

SIM

SIINOS

GOVOSSAI

YEAR 2001

YEAR 2002

YEAR 2003

YEAR 2004

YEAR 2005

Comments (1)Water demand is inelastic so there will be a little reaction to an

increase of price; water is a normal good so consumption will increase along with income

In this model, water rationing measures seem to have no influence on consumption. This is most probably due to the fact that households have adopted defensive measures to contrast the restrictions imposed (storage tanks)

Utilities dummies take into account differences in management tools, such as billing frequency or tariff structure, which may influence average consumption.

In 2005, consumption increases less than in previous years: possible effect of new tariff, but further data should be necessary.

Comments (2)The “coastalization” process determines new estate

development, and relinquishment of old dwellings in the interior country towns and villages. The building typology in coastal areas differs from that of the interior: in particular it is more common that houses are endowed with lawns and gardens, and this will lead to an increase in the demand of water, especially when the climate is hot and dry.

Comments (3)Our results seem to support the idea that the

life style leads to increasing water consumption: large households and working force, who are more numerous in coastal and sub-coastal towns, consume more water.

Home owners consume less than tenants, probably due to the fact that the latter do not receive correct price signals for their consumption behaviour if, as it often is the case, the rent includes the water bill: there is no incentive to avoid waste and to adopt more efficient technology.

Comments (4)A very high presence of

tourists in secondary homes leads to a significant increase in water consumption per user.

This has the effect of spuriously inflating the residential demand of water in the most popular tourist towns: when decisions have to be made about the allocation of water among sectors, this will have undesirable distributive effects, since “unofficial” tourist lodges can take advantage of regulations which in shortage periods favour residential uses of water and penalize other sectors.

Comments (5)

  Average consumption (in cubic meters) of:

no tourist impact low tourist impact intermediate tourist impact

high tourist impact

2000 108.83 119.68 129.25 139.74

2001 111.21 122.30 132.09 142.80

2002 110.63 121.66 131.39 142.05

2003 115.32 126.82 136.97 148.08

2004 117.24 128.92 139.24 150.54

2005 113.33 124.63 134.60 145.52

Policy Suggestions (1)Tariff structures and price

level are useful to manage demand but non price instrument can also influence consumers’ behaviour.

Information campaigns on the benefits of inserting flow reducing devices and on efficient water use, could be helpful to induce a more responsible consumers’ behavior.

Policy Suggestions (2) Information and financial incentives should be aimed at encouraging

the adoption of good practices in landscaping; and to promote grey

water collection and treatment systems in resort condominiums, to

be used for irrigation in the residential or in the agricultural sector.

This would represent a great improvement in the efficiency of the use of

the resource, having the twofold effect of decreasing both the demand of

water and the sewage discharge. It is well known that water shortages in

coastal areas intensify the use of water wells in agriculture, so

aggravating the process of salinization and desertification of coastal land.

VANIA STATZU

Water management in ItalyNational Law 36/1994

Water property shift from private to public

Water management at hidrographic basin level: ATOs

One water utility for basin In house, public owned

corporation, public companies and mixed systems

Full Cost Recovery Principle for tariffs

Problems:The double role of

majors in ATOs and in public utilities The problem of public

owned corporations as in house utilities

The ATOs abolishment

Absence of a national authority

Absence of a coherent legislative framework after 1994

After the referendumReferendum stopped the attempt

to force public owned corporations to assign shares to public companies

Contracts are quite long: no changes in management situation immediately

At the moment, situation is quite confusing and Italy required a new water framework law: now municipalities can choose in house utilities but nothing is clear about public owned corporation, mixed situation and private companies

Referendum eliminate the capital cost recovery of 7% imposed by law

Investments may be stopped without an agreement to keep previous agreement

What we need:A national water

authorityNational rules on

water managementA system of

benchmarking to achieve a higher level of efficiency

a different roles for municipalities: more power to decide but not a double role

ATOs or not ATOs: this is the problem!

Promote public-private agreements to finance investments Project financing

ecc.Debate on the role

of tariff systems

Thank you for your attention!

[email protected]