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An estimation of residential water demand using co-integration and error correction tec hniques

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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.

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Article provided by Universidad del CEMA in its journal Journal of Applied Economics.

Volume (Year): X (2007)
Issue (Month): (May)
Pages: 161-184

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Handle: RePEc:cem:jaecon:v:10:y:2007:n:1:p:161-184

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Cited by:
  1. Ben Zaied Younes, 2013. "A long-run analysis of residential water consumption," Economics Bulletin, AccessEcon, vol. 33(1), pages 536-544.
  2. Marie-Estelle Binet & Younes Ben Zaïd, 2011. "A Seasonal Integration and Cointegration Analysis of Residential Water Demand in Tunisia," Economics Working Paper Archive (University of Rennes 1 & University of Caen), Center for Research in Economics and Management (CREM), University of Rennes 1, University of Caen and CNRS 201122, Center for Research in Economics and Management (CREM), University of Rennes 1, University of Caen and CNRS.
  3. David R. Bell & Ronald C. Griffin, 2011. "Urban Water Demand with Periodic Error Correction," Land Economics, University of Wisconsin Press, University of Wisconsin Press, vol. 87(3), pages 528-544.

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