Potential for Pricing Policies in Water Resource Management: Estimation of Urban Residential Water Demand in Zaragoza, Spain

Abstract

This paper presents an empirical study to estimate the urban residential water demand in Zaragoza, Spain; this allows the testing of the short-run sensitivity of water demand to changes in a set of socioeconomic variables and especially in prices. A residential water demand model is estimated using a dynamic panel data technique. Furthermore, three water demand equations have been proposed and two alternative process specifications are applied. The empirical application suggests that the linear demand specification is the most adequate. Finally, the results indicate that domestic demands are inelastic with respect to price.