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More Water Please, It's Getting Hot! The Effect of Climate on Residential Water Demand

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  • Oscar Zapata

    (Department of Economics, University of Calgary, 2500 University Drive NW, Calgary, Alberta T2N 1N4, Canada)

Abstract

Climate change is expected to alter the supply and demand for water in the residential sector. Existing studies exploit the differences in climate across seasons mostly in North America and Europe, and identify changes in consumption levels attributed only to households' short-term responses. The results from models that simulate household consumption of water are sensitive to the parameters that govern the behavior of climate variables and household responses in the upcoming decades, and fail to consider short-term determinants of water consumption. The findings in the literature suggest an inexistent or small effect of climate on residential water demand. This paper studies the relationship between climate conditions and residential water consumption that corresponds to households' long-term adaptation to climate, while controlling for the effect of short-term determinants of water demand. I take advantage of the geographic variation in climate conditions across municipalities of Ecuador to identify the effect of temperature, precipitation and humidity on water demand. I adopt average prices and an IV technique to address the endogeneity problem between water prices and quantities that arise from the use of increasing-block water tariffs. I find a large and significant effect of temperature on residential water demand, whereas precipitation and humidity have a small effect. Temperature also has a stronger effect on water demand among low-income households.

Suggested Citation

  • Oscar Zapata, 2015. "More Water Please, It's Getting Hot! The Effect of Climate on Residential Water Demand," Water Economics and Policy (WEP), World Scientific Publishing Co. Pte. Ltd., vol. 1(03), pages 1-23.
    • Handle: RePEc:wsi:wepxxx:v:01:y:2015:i:03:n:s2382624x15500071
    DOI: 10.1142/S2382624X15500071
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    References listed on IDEAS

    as
    1. John Luke Gallup & Alejandro Gaviria & Eduardo Lora, 2003. "Is Geography Destiny? Lessons from Latin America," World Bank Publications - Books, The World Bank Group, number 14454, December.
    2. repec:idb:brikps:59398 is not listed on IDEAS
    3. Cader, Hanas A. & Marsh, Thomas L. & Peterson, Jeffrey M., 2004. "Predicting Household Water Consumption Under A Block Price Structure," 2004 Annual Meeting, June 30-July 2, 2004, Honolulu, Hawaii 36241, Western Agricultural Economics Association.
    4. John Luke Gallup & Alejandro Gaviria & Eduardo Lora, 2003. "Is Geography Destiny? Lessons from Latin America," World Bank Publications, The World Bank, number 14454, September.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Havranek, Tomas & Irsova, Zuzana & Vlach, Tomas, 2016. "Publication Bias in Measuring the Income Elasticity of Water Demand," MPRA Paper 75247, University Library of Munich, Germany.
    2. Tomas Havranek & Zuzana Irsova & Tomas Vlach, 2018. "Measuring the Income Elasticity of Water Demand: The Importance of Publication and Endogeneity Biases," Land Economics, University of Wisconsin Press, vol. 94(2), pages 259-283.
    3. Oscar Zapata, 2018. "Industrial Wastewater Treatment and Reuse in a Developing Country Context: Evidence at the Firm Level from Ecuador," Water Economics and Policy (WEP), World Scientific Publishing Co. Pte. Ltd., vol. 4(02), pages 1-28, April.
    4. Zapata, Oscar, 2021. "The relationship between climate conditions and consumption of bottled water: A potential link between climate change and plastic pollution," Ecological Economics, Elsevier, vol. 187(C).
    5. Mkaddem, Chamseddine & Mahjoubi, Soufiane, 2022. "Climate change and its impact on water consumption in Tunisia: Evidence from ARDL approach," MPRA Paper 115658, University Library of Munich, Germany, revised Dec 2022.

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