Search results for "Shadow price"
showing 10 items of 20 documents
Estimating the environmental and resource costs of leakage in water distribution systems: A shadow price approach.
2016
Water scarcity is one of the main problems faced by many regions in the XXIst century. In this context, the need to reduce leakages from water distribution systems has gained almost universal acceptance. The concept of sustainable economic level of leakage (SELL) has been proposed to internalize the environmental and resource costs within economic level of leakage calculations. However, because these costs are not set by the market, they have not often been calculated. In this paper, the directional-distance function was used to estimate the shadow price of leakages as a proxy of their environmental and resource costs. This is a pioneering approach to the economic valuation of leakage exter…
Feasibility Studies for Water Reuse Projects: Economic Valuation of Environmental Benefits
2010
Water reuse is emerging as a promising alternative because it enables water resources to be increased and lowers pollution levels by reducing wastewater. In recent decades, significant technological progress has been made in the field of wastewater regeneration; and project feasibility is now mostly subject to just economic assessment. However, the economic aspect is the least addressed aspect of research into water reuse. This is because private costs are generally considered while the external effects are relegated to a series of statements about the advantages of water reuse. Methodologies used to analyze the economic feasibility of these projects usually focus on internal costs. As a re…
The shadow price of foreign exchange with minimum wages
2001
Abstract This note derives the shadow price of foreign exchange in a small open economy with minimum wage unemployment under tariffs, quotas and voluntary export restraints. The analysis is conducted in a dual general equilibrium framework with many goods and factors.
The calculation of shadow prices for industrial wastes using distance functions: An analysis for Spanish ceramic pavements firms
2001
Abstract This paper deals with the calculation of shadow prices for two industrial wastes generated on their production processes by 18 firms belonging to the Spanish ceramic pavements industry. These prices are then used to calculate an extended productivity index which takes into consideration wastes going with the production of marketable goods. We follow the methodological approach first proposed by Fare et al. (The Review of Economics and Statistics 75 (1993)). A negative correlation is found between absolute shadow prices and wastes production intensity, reflecting a greater marginal cost of eliminating wastes for those firms using less contaminant production processes. Differences be…
Efficient Port Pricing: A New Methodology Applied to Spanish Commercial Ports
2000
This paper presents a methodology for determining efficient tariffs for the services provided by commercial ports. With this method, efficient unit profits can be obtained for the services offered and their margins of sensitivity can be found. This allows port authorities to determine what actions should be taken with regard to tariffs and/or variable costs in order to optimise their economic results. At the same time, shadow prices of port resources and their limits of sensitivity can be obtained, thus providing port authorities with orientation regarding which resources should be augmented and by how much. In the early 90's, this methodology was applied to all Spanish commercial ports and…
Neoclassical Growth, Environment and Technological Change: The Environmental Kuznets Curve
2009
The paper investigates socially optimal patterns of economic growth and environmental quality in a neoclassical growth model with endogenous technological progress. In the model, the environmental quality affects positively not only to utility but also to production. However, cleaner technologies can be used in the economy whether a part of the output is used in environmentally oriented R&D. In this framework, if the initial level of capital is low then the shadow price of a cleaner technology is low relative to the cost of developing it given by the marginal utility of consumption and it is not worth investing in R&D. Thus, there will be a first stage of growth based only on the accumulati…
How much should customers be compensated for interruptions in the drinking water supply?
2017
Water supply interruptions directly affect customers, and customers should be compensated accordingly. However, few water regulators have applied compensation policies given the difficulty of estimating the economic value of compensation to customers. In this study, a pioneering approach based on the concept of shadow prices is proposed to determine the compensation that customers should receive for unplanned water interruptions. The Chilean water industry was selected as a case study because there is an ongoing policy discussion between the use of penalties or compensation as an incentive to prevent water supply interruptions. The estimated results indicate that for 2014, the value of comp…
Estimating the cost of improving service quality in water supply: A shadow price approach for England and wales
2015
Service quality to customers is an aspect that cannot be ignored in the performance assessment of water companies. Nowadays water regulators introduce awards or penalties to incentivize companies to improve service quality to customers when setting prices. In this study, the directional distance function is employed to estimate the shadow prices of variables indicating the lack of service quality to customers in the water industry i.e., written complaints, unplanned interruptions and properties below the reference level. To calculate the shadow price of each undesirable output for each water company, it is needed to ascribe a reference price for the desirable output which is the volume of w…
Environmental Benefits of Wastewater Treatment: An Economic Valuation
2009
The need of economic research into the design and implementation of policies for the efficient management of water resources has been emphasized by the European Water Framework Directive (Directive 2000/60/UE). The efficient implementation of policies to prevent the degradation and depletion of water resources requires determining their value in social and economic terms and incorporating this information into the decision-making process. A process of wastewater treatment has many associated environmental benefits. However, these benefits are often not calculated because they are not set by the market. Nevertheless, the valuation of these benefits is necessary to justify a suitable investme…
- SHADOW PRICES AND DISTANCE FUNCTIONS: AN ANALYSIS FOR FIRMS OF THE SPANISH CERAMIC PAVEMENTS INDUSTRY.
1999
This paper deals with the calculation of shadow prices for two industrial wastes generated on their production processes by a sample of eighteen firms belonging to the Spanish ceramic pavements industry. These prices are used to construct a corrected index of productivity which allows for considering wastes going with the production of marketable goods. It is followed the ethodologicalapproach first proposed by Färe, Grosskopf, Lovell y Yaisawarng (1993), which establishes a duality between distance and revenue functions. The shadow prices obtained for watery muds and used oils allow to measure in terms of a loss of marketable output the cost of achieving a marginal reduction in the product…