Is all domestic water consumption sensitive to price control?

Roberto Martinez-Espineira () and Celine Nauges

Applied Economics, 2004, vol. 36, issue 15, 1697-1703

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).

Date: 2004
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DOI: 10.1080/0003684042000218570

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