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Demand Management Factors in Residential Water Use: The Southern Arizona Experience
Author(s) -
Billings R. Bruce,
Day W. Mark
Publication year - 1989
Publication title -
journal ‐ american water works association
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.466
H-Index - 74
eISSN - 1551-8833
pISSN - 0003-150X
DOI - 10.1002/j.1551-8833.1989.tb03182.x
Subject(s) - water utility , economics , water use , agricultural economics , metropolitan area , demand management , variable (mathematics) , environmental science , water supply , econometrics , environmental engineering , geography , mathematics , ecology , mathematical analysis , macroeconomics , archaeology , biology
Two models of residential water demand were run with data from three water utilities in the Tucson, Ariz., metropolitan area to estimate the response of water use to variations in price, household income, and a variety of socioeconomic and climatic variables. The study covered a period when all three utilities experienced substantial reductions in residential water use. All three utilities examined imposed availability‐of‐service charges, and the largest utility used increasing‐block rates and seasonal rates. Because of disagreement in the literature about the proper specification of price under these conditions, demand models were estimated using both the traditional average‐price variable and the marginal price plus rate premium. Estimated long‐term price elasticities for the combined time‐series‐cross‐section models averaged ‐0.72, and they varied depending on model specification and time period. Individual demographic district elasticities were also estimated. Several principles of conservation pricing and other aspects of demand management for water utilities are discussed.