Estimation of price and income elasticity of water: a case study of Darjeeling town, West Bengal, India

Abstract

This study examines the price and income elasticity of water of Darjeeling town in West Bengal, India. We collected the primary data between 2017 and 2018 through the survey method. Here simple random sampling has been used for interviewing 100 house- holds. We divided the households into groups of 25 each according to the mode of consumption of water, such as domestic pipeline, commercial pipeline, domestic water tanker, and commercial water tanker. This study concludes that the price for domestic pipe- line connection, commercial pipeline, domestic water tanker, and commercial water tanker is elastic by using the midpoint formulae of elasticity. More specifically, the consumption of commercial water tanker and commercial pipeline connection is relatively more elastic as compared to the domestic pipeline and domestic water tanker. Further, the result shows that the income elasticity of water demand is relatively high. Mainly, the income elasticity is less in the domestic pipeline and domestic water tanker compared to those under commercial pipeline and commercial water tanker. The paper's overall implication is that rising water per litre price has compelled the residents to compromise on the quality of drinking water. Therefore, it is recommended that the government follows the objective of inter-generational equity for water in the long run.