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An Estimation of Residential Water Demand Using Co-integration and Error Correction Techniques

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Author Info
Roberto Martinez Espineira (St. Francis Xavier University)

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Abstract

The purpose of this paper is to measure the short- and long-run effect ofthe price of water on residential water use. 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 demand model, which makes possible to obtain a partial correction term and to estimate an error correction model. The empirical application uses monthly time-series observations from Seville (Spain). 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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Paper provided by EconWPA in its series Others with number 0410002.

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Length: 47 pages
Date of creation: 03 Oct 2004
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Handle: RePEc:wpa:wuwpot:0410002

Note: Type of Document - pdf; pages: 47
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Web page: http://129.3.20.41

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Related research
Keywords: seasonal unit roots; residential water demand; price elasticity; time-series; co-integration; Error Correction Model.;

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Find related papers by JEL classification:
C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions
D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water

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