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Determinants of residential water demand in Germany

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  • Schleich, Joachim
  • Hillenbrand, Thomas

Abstract

In this paper we econometrically analyze the impact of several economic, environmental and social determinants for the average per capita demand for water and sewage in about 600 water supply areas in Germany. Besides prices, income and household size, we also consider the effects of population age, the share of wells, and rainfall and temperature during the summer months on water demand. We also attempt to explain regional differences in per capita residential water consumption, which is currently about 30 % lower in the new federal states than in the old states. Our estimate for the price elasticity of -0.229 suggests that the response of residential water demand in Germany is rather inelastic, but no significant difference could be found between both regions. In contrast, the income elasticity in the new states is found to be 0.685 which is more than double that of the old states. Differences in prices and income alone explain the largest part of the current gap in residential water use between the two regions. Our results further suggest that household size, the share of wells and summer rainfall have a negative impact on water demand. In contrast, higher age appears to be associated with higher water use. We also find (weak) evidence for an impact of rainfall but not of temperature on residential water use. Our findings imply that future research should include analyses of household- level data to further explore the effects of socio-economic determinants, and analyses of panel data to adequately study the effects of climate change on residential water use. --

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Bibliographic Info

Paper provided by Fraunhofer Institute for Systems and Innovation Research (ISI) in its series Working Papers "Sustainability and Innovation" with number S3/2007.

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Date of creation: 2007
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Handle: RePEc:zbw:fisisi:s32007

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  1. Gilg, Andrew & Barr, Stewart, 2006. "Behavioural attitudes towards water saving? Evidence from a study of environmental actions," Ecological Economics, Elsevier, vol. 57(3), pages 400-414, May.
  2. Maria García-valiñas, 2005. "Efficiency and Equity in Natural Resources Pricing: A Proposal for Urban Water Distribution Service," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 32(2), pages 183-204, October.
  3. S. Gaudin, 2006. "Effect of price information on residential water demand," Applied Economics, Taylor & Francis Journals, vol. 38(4), pages 383-393.
  4. Olmstead, Sheila M. & Michael Hanemann, W. & Stavins, Robert N., 2007. "Water demand under alternative price structures," Journal of Environmental Economics and Management, Elsevier, vol. 54(2), pages 181-198, September.
  5. Sylvestre Gaudin & Ronald C. Griffin & Robin C. Sickles, 2001. "Demand Specification for Municipal Water Management: Evaluation of the Stone-Geary Form," Land Economics, University of Wisconsin Press, vol. 77(3), pages 399-422.
  6. Massimiliano Mazzanti & Anna Montini, 2005. "The Determinants of Residential Water Demand Empirical Evidence for a Panel of Italian Municipalities," Working Papers 2005.27, Fondazione Eni Enrico Mattei.
  7. Rita Martins & Adelino Fortunato, 2005. "Residential water demand under block rates: a Portuguese case study," GEMF Working Papers 2005-09, GEMF - Faculdade de Economia, Universidade de Coimbra.
  8. Andrew C. Worthington & Mark Hoffman, 2008. "An Empirical Survey Of Residential Water Demand Modelling," Journal of Economic Surveys, Wiley Blackwell, vol. 22(5), pages 842-871, December.
  9. Antonioli, B. & Filippini, M., 2001. "The use of a variable cost function in the regulation of the Italian water industry," Utilities Policy, Elsevier, vol. 10(3-4), pages 181-187.
  10. Roberto Martinez-Espineira & Celine Nauges, 2004. "Is all domestic water consumption sensitive to price control?," Applied Economics, Taylor & Francis Journals, vol. 36(15), pages 1697-1703.
  11. R. Martínez-Espiñeira, 2003. "Estimating Water Demand under Increasing-Block Tariffs Using Aggregate Data and Proportions of Users per Block," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 26(1), pages 5-23, September.
  12. Garcia, Serge & Reynaud, Arnaud, 2004. "Estimating the benefits of efficient water pricing in France," Resource and Energy Economics, Elsevier, vol. 26(1), pages 1-25, March.
  13. R. G. Taylor & John R. McKean & Robert A. Young, 2004. "Alternate Price Specifications for Estimating Residential Water Demand with Fixed Fees," Land Economics, University of Wisconsin Press, vol. 80(3), pages 463-475.
  14. R. Martinez-Espiñeira, 2002. "Residential Water Demand in the Northwest of Spain," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 21(2), pages 161-187, February.
  15. Hausman, Jerry A, 1978. "Specification Tests in Econometrics," Econometrica, Econometric Society, vol. 46(6), pages 1251-71, November.
  16. Céline Nauges & Alban Thomas, 2000. "Privately Operated Water Utilities, Municipal Price Negotiation, and Estimation of Residential Water Demand: The Case of France," Land Economics, University of Wisconsin Press, vol. 76(1), pages 68-85.
  17. Antonio Musolesi & Mario Nosvelli, 2007. "Dynamics of residential water consumption in a panel of Italian municipalities," Applied Economics Letters, Taylor & Francis Journals, vol. 14(6), pages 441-444.
  18. Ruijs, A. & Zimmermann, A. & van den Berg, M., 2008. "Demand and distributional effects of water pricing policies," Ecological Economics, Elsevier, vol. 66(2-3), pages 506-516, June.
  19. 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.
  20. Jasper M. Dalhuisen & Raymond J. G. M. Florax & JHenri L. F. de Groot & Peter Nijkamp, 2003. "Price and Income Elasticities of Residential Water Demand: A Meta-Analysis," Land Economics, University of Wisconsin Press, vol. 79(2), pages 292-308.
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Cited by:
  1. Simona FRONE, 2012. "Issues On The Role Of Efficient Water Pricing For Sustainable Water Management," Romanian Journal of Economics, Institute of National Economy, vol. 34(1(43)), pages 84-111, June.
  2. Marie-Estelle Binet & Fabrizio Carlevaro & Michel Paul, 2012. "Estimation of Residential Water Demand with Imprecise Price Perception," Economics Working Paper Archive (University of Rennes 1 & University of Caen) 201233, Center for Research in Economics and Management (CREM), University of Rennes 1, University of Caen and CNRS.
  3. Fullerton, Thomas M., Jr. & White, Katherine & Smith, Wm. Doyle & Walke, Adam G., 2012. "An Empirical Analysis of Halifax Municipal Water Consumption," MPRA Paper 54113, University Library of Munich, Germany, revised 14 Mar 2013.
  4. Arbues, Fernando & Villanu´a, Inmaculada & Barberan, Ramon, 2010. "Household size and residential water demand: an empirical approach," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 54(1), March.
  5. Maria A. García-Valiñas & Roberto Martínez-Francisco & González-Gómez, 2010. "Water affordability: alternativem measurement and explanatory Factors in Andalusia," Centre for Water Economics, Environment and Policy Papers 1014, Centre for Water Economics, Environment and Policy, Crawford School of Public Policy, The Australian National University.
  6. R. Quentin Grafton & Michael B. Ward & Hang To & Tom Kompas, 2011. "Determinants of Residential Water Consumption: Evidence and Analysis from a Ten-country Household Survey," Crawford School Research Papers 1114, Crawford School of Public Policy, The Australian National University.
  7. Maria A. García‐Valiñas & Roberto Martínez‐Espiñeira & Francisco González‐Gómez, 2010. "Economics of Water Reform in the Murray-Darling Basin," Centre for Water Economics, Environment and Policy Papers 1005, Centre for Water Economics, Environment and Policy, Crawford School of Public Policy, The Australian National University.
  8. Henrique Monteiro, 2010. "Residential Water Demand in Portugal: checking for efficiency-based justifications for increasing block tariffs," Working Papers Series 1 ercwp0110, ISCTE-IUL, Business Research Unit (BRU-IUL).
  9. Müller, Christopher, 2012. "Welfare Effects of Water Pricing in Germany," MPRA Paper 41638, University Library of Munich, Germany.
  10. Genovaitė Liobikienė & Justina Mandravickaitė, 2013. "Convergence of new members of the EU: changes in household consumption expenditure structure regarding environmental impact during the prosperous period," Environment, Development and Sustainability, Springer, vol. 15(2), pages 407-427, April.

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