Estimation of Residential Water Demand under Uniform Volumetric Water Pricing

AbstractUnderstanding the factors affecting residential water demand is critical to implement and to improve water management policies during the extreme climate conditions such as drought. As few studies relating water demand to uniform volumetric water pricing exist, this study aims to determine the price and income elasticity of residential water demand under uniform water pricing. Second, this study compares the elasticity of both marginal and average pricing for predrought and during-drought periods and seasonal low and high consumption periods. Individual household water consumption, household age, household value, parcel size, water price, and weather variables from July 2009 through December 2012 for the Oklahoma City area, OK were used. A two-stage least-squares estimation with an instrumental variable was used to develop a water demand model. Results indicate that water demand was inelastic to water price except for high-consumption periods. Parcel size, income, and temperature were positively r...

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