An Estimation of Residential Water Demand Using Co-Integration and Error Correction Techniques

Roberto Martinez-Espineira ()

Journal of Applied Economics, 2007, vol. 10, issue 1, 161-184

Abstract: In this paper short- and long-run price elasticities of residential water demand are estimated using co-integration and error-correction methods. Unit root tests reveal that water use series and series of other variables affecting use are non-stationary. However, a long-run co-integrating relationship is found in the water demand model, which makes it possible to obtain a partial correction term and to estimate an error correction model. Using monthly time-series observations from Seville, Spain, we find that the price-elasticity of demand is estimated as around -0.1 in the short run and -0.5 in the long run. These results are robust to the use of different specifications.

Date: 2007
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Working Paper: An Estimation of Residential Water Demand Using Co-Integration and Error Correction Techniques (2006)
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DOI: 10.1080/15140326.2007.12040486

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