The estimation of domestic water demand function of urban households (case study: Tabriz city)

Abstract

The purpose of this study is to estimate the domestic demand functions of Tabriz city and the elasticity of water demand with respect to price and income. To do that, the model of drinking water demand is used based on time-series-cross-section data (TSCS) for a period five years from 1999 to 2003. The theory basics of the selected model, for estimating the coefficients of water demand, are based on Stone-Geary utility function. The per-capita water consumption, the minimum requirement of water, and excessive consumption are calculated after estimating the water demand in different conditions, determining the coefficients of demand functions, and the share of factors affecting water consumption level such as income, average price of water and meteorological factors. The findings show that the price elasticity of non-domestic consumption is two times more than domestic one. Meanwhile, the calculating of price elasticity of per-capita demand functions for Tabriz’s households separately and in seasonal term, shows that maximum elasticity belongs to summer which has the highest consumption. The seasonal per-capita water consumption has a positive association with income and negative one with price. Based on the findings, the relative price of water can has more evident effect upon reduction of unnecessary consumption and this is more palpable in non-domestic consumption. In addition, with increase of prices of drinking water in summer the highest reduction of water consumption can occur which shows that the price increase policy for reducing consumption of inessential water in summer is effective.