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Is all domestic water consumption sensitive to price control?

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Abstract:

This paper presents a model of residential water demand based on the Stone-Geary utility function, which explicitly considers a threshold of water that is insensitive to price and a quantity that can adapt instantaneously to price changes. First, the threshold is assumed constant, being then allowed to vary according to past levels of consumption, a proxy for households' water-using equipment and habits. A measure of the depreciation rate of habits is derived and the effectiveness of price and non-price conservation measures are compared. The results provide useful policy recommendations for the studied case of Seville (Spain).

Document Type: Research Article

DOI: http://dx.doi.org/10.1080/0003684042000218570

Publication date: January 1, 2004

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