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

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.