Estimating Water Demand Elasticity at the Intensive and Extensive Margin

Daniel Brent

Departmental Working Papers from Department of Economics, Louisiana State University

Abstract: I exploit a unique panel dataset of monthly water metering records and annual land- scape choices from satellite data for more than 170,000 households over 12 years to estimate price elasticity at the intensive and extensive margin. Higher water prices significantly increase the probability of adopting water conserving landscapes. The extensive margin only accounts for 2-3% of total elasticity in the short run and this increases to 6-24% in the long run. As cities transition away from water-intensive landscapes aggregate demand becomes less elastic and future conservation in the face of droughts becomes more challenging.

Date: 2016-06
New Economics Papers: this item is included in nep-agr
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Persistent link: https://EconPapers.repec.org/RePEc:lsu:lsuwpp:2016-06

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