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A Seasonal Integration and Cointegration Analysis of Residential Water Demand in Tunisia

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  • Marie-Estelle Binet

    (University of Rennes 1 - CREM, (UMR 6211 CNRS))

  • Younes Ben Zaïd

    (University of Rennes 1 - CREM, (UMR 6211 CNRS))

Abstract

The main originality of this article is to empirically incorporate the effect of seasonality in estimating the residential water demand function. We use quarterly times series for the period 1980.1 to 2007.4 from Tunisia and a two consumption blocks decomposition (in a lower and in an upper blocks). As the Error Correction model is poorly significant, we obtain a long-run price elasticity for the upper block equals to -0.39 and greater than the corresponding short run elasticity which is not significant. Therefore, we are able to advocate policies for the upper block both in favor of a water management through pricing and promoting the adoption of water saving equipments. The introduction of seasonality claims for new insights concerning water conservation policies as evidence in favor of seasonal cointegration at biannual frequency is found for the two blocks. Results show that a seasonal pricing policy will not be efficient to reduce the upper block consumption. But, as a part of the consumers switch from the lower to the upper block in summer, we propose to increase the length of the lower block to ensure the satisfaction of households’ essential needs in all seasons.

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Bibliographic Info

Paper provided by Center for Research in Economics and Management (CREM), University of Rennes 1, University of Caen and CNRS in its series Economics Working Paper Archive (University of Rennes 1 & University of Caen) with number 201122.

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Date of creation: Nov 2011
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Handle: RePEc:tut:cremwp:201122

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Postal: CREM (UMR CNRS 6211) - Faculty of Economics, 7 place Hoche, 35065 Rennes Cedex - France
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Keywords: Residential water demand; seasonal cointegration; seasonal error correction model;

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References

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  1. Roberto Martínez-Espiñeira, 2007. "An estimation of residential water demand using co-integration and error correction tec hniques," Journal of Applied Economics, Universidad del CEMA, vol. 0, pages 161-184, May.
  2. Céline Nauges & Alban Thomas, 2003. "Long-run Study of Residential Water Consumption," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 26(1), pages 25-43, September.
  3. Céline Nauges & Dale Whittington, 2010. "Estimation of Water Demand in Developing Countries: An Overview," World Bank Research Observer, World Bank Group, World Bank Group, vol. 25(2), pages 263-294, August.
  4. Hyllerberg, S. & Engle, R.F. & Granger, C.W.J. & Yoo, B.S., 1988. "Seasonal Integration And Cointegration," Papers, Pennsylvania State - Department of Economics 0-88-2, Pennsylvania State - Department of Economics.
  5. Mohamed Ayadi & Jaya Krishnakumar & Mohamed Salah Matoussi, 2002. "A Panel Data Analysis of Residential Water Demand in Presence of Nonlinear Progressive Tariffs," Research Papers by the Institute of Economics and Econometrics, Geneva School of Economics and Management, University of Geneva 2002.06, Institut d'Economie et Econométrie, Université de Genève.
  6. Arbues, Fernando & Garcia-Valinas, Maria Angeles & Martinez-Espineira, Roberto, 2003. "Estimation of residential water demand: a state-of-the-art review," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 32(1), pages 81-102, March.
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