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Short‐ and long‐run effects of price on municipal water use
Author(s) -
Carver Philip H.,
Boland John J.
Publication year - 1980
Publication title -
water resources research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.863
H-Index - 217
eISSN - 1944-7973
pISSN - 0043-1397
DOI - 10.1029/wr016i004p00609
Subject(s) - short run , econometrics , economics , elasticity (physics) , aggregate (composite) , environmental science , monetary economics , thermodynamics , materials science , physics , composite material
Empirical studies of the response of municipal water use to price have frequently failed to distinguish between long‐ and short‐run aspects of adjustments in water use. Pooled time series and cross‐sectional data for the Washington, D. C., metropolitan area are used to estimate both the long‐ and short‐run response of aggregate water use to price. The data are fitted to a flow adjustment model of the Nerlove (1958) type. Short‐run elasticity for aggregate annual water use is shown to be less than 0.1 in absolute value, while long‐run elasticities are evidently within the range of results reported by previous investigators. When water use is separated into seasonal and nonseasonal components, however, the elasticities estimated for the seasonal component are substantially smaller (more inelastic) than previously reported, both in the short run and in the long run.