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Political Economy of Water Pricing Policy: Empirical Evidence from Public Utilities in Mauritius

Publication Type : Journal Article

Publisher : Water Resources Research

Source : Water Resources Research, Volume 40, Issue 7, p.1-9 (2004)

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Keywords : economics of water pricing, Political economy, public economics, public utility pricing

Campus : Amritapuri

School : Department of Management, School of Business

Center : Amrita Center for Economics & Governance (ACEG)

Department : Department of Management

Year : 2004

Abstract : pThis paper examines whether political economy considerations are important in the formulation of water pricing policy in Mauritius. Empirical models are developed incorporating current and lagged electoral years as dummy variables in order to test whether politicians make strategic use of water pricing policy to further their partisan electoral objectives. Political economy concerns are also included into our analysis by looking at the impact of lobby groups on the implementation of water prices. In the case of potable water prices, a disaggregated analysis according to consumer categories provides weak evidence of political manipulation. However, political manipulation is established in terms of subsidy allocations to the residential sector, which is the largest consumer category. As regards irrigation water, the results lend support to the contention that political parties indeed manipulate irrigation subsidies allocated to the Irrigation Authority. Evidence on the lobby effect emerges from our empirical analysis on potable water. More specifically, we find that smaller groups have successfully been able to use their political influence to obtain smaller water price increases./p

Cite this Research Publication : Yeti N. Madhoo, “Political Economy of Water Pricing Policy: Empirical Evidence from Public Utilities in Mauritius”, Water Resources Research, vol. 40, 2004.

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