An econometric estimation of industrial water demand in France.

Summary This study analyzes the structure of industrial water demand by estimating the derived water demand on a sample of industrial plants in southwestern France. Production technologies are represented by short-run variable cost functions, and are approximated by a flexible Translog form. Industrial water use is modeled in three components: the amount of water purchased from a water utility, the amount of autonomous source water and the amount of water used after pre-treatment. This paper includes in this framework the emissions of pollutants from the facilities, which are considered as joint products of the production process. Each of the three components is treated as a separate input, and all are estimated in a simultaneous system of equations. The model is estimated on a sample of 51 industrialists in Gironde between 1994 and 1996, with the SUR and Feasibles GLS procedures. The results of the estimations show that the industrialists are sensitive to the price of water as a factor of production. The elasticity of the price of mains water is estimated at -0.29, and varies from -0.10 to -0.79 depending on the industry considered. The price elasticity of "autonomous" water is not significant, and the price elasticity of pre-treated water is estimated at -1.42 at the average point of the sample, varying between -0.90 and 2.21 depending on the industry considered.