Skip to main content

Long-run water demand estimation: habits, adjustment dynamics and structural breaks

Buy Article:

$47.50 plus tax (Refund Policy)

This article examines a water demand equation for Milan for the second half of the 20th century: 1950–2001. We focus mainly on the effects of price and habits, but also account for other factors in the demand for water such as climate, income and productive activity. Allowing for trend break stationarity or nonlinear trend stationarity, we find evidence against the unit root hypothesis for many time series. Based on this result, standard cointegration analysis would not be appropriate; therefore we adopt an alternative estimation and testing procedure. We focus, in particular, on the so-called bounds testing approach, which can be applied irrespective of the level of integration of the variables and which can be a useful modelling strategy given that dynamics are important when estimating a water demand equation. The main results are that long-run price elasticity is higher than short-run elasticity, and that consumption habits are relevant. We also find that both climate, sectoral and technological modifications affect water consumption, while income is not significant. Finally, the changes to pricing schemes in the mid-1970s provoked reactions of different magnitudes among households and firms.
No Reference information available - sign in for access.
No Citation information available - sign in for access.
No Supplementary Data.
No Article Media
No Metrics

Document Type: Research Article

Affiliations: 1: INRA, CESAER, 26 Bd Dr PetitjeanDijon, 21079 France 2: CNR CERIS, Milano, Italy

Publication date: 2011-07-01

More about this publication?
  • Access Key
  • Free content
  • Partial Free content
  • New content
  • Open access content
  • Partial Open access content
  • Subscribed content
  • Partial Subscribed content
  • Free trial content
Cookie Policy
Cookie Policy
Ingenta Connect website makes use of cookies so as to keep track of data that you have filled in. I am Happy with this Find out more