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Nondiscretionary residential water use: the impact of habits and water‐efficient technologies
Author(s) -
GarciaValiñas Maria A.,
Athukorala Wasantha,
Wilson Clevo,
Torgler Benno,
Gifford Robert
Publication year - 2014
Publication title -
australian journal of agricultural and resource economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.683
H-Index - 49
eISSN - 1467-8489
pISSN - 1364-985X
DOI - 10.1111/1467-8489.12030
Subject(s) - water consumption , stock (firearms) , water use , consumer behaviour , subsistence agriculture , consumption (sociology) , price elasticity of demand , economics , capital (architecture) , environmental economics , water resource management , environmental science , business , natural resource economics , microeconomics , marketing , geography , ecology , social science , archaeology , sociology , biology , agriculture
Several studies published in the last few decades have demonstrated a low price‐elasticity for residential water use. In particular, it has been shown that there is a quantity of water demanded that remains constant regardless of prices and other economic factors. In this research, we characterise residential water demand based on a Stone‐Geary utility function. This specification is not only theory‐compatible but can also explicitly model a minimum level of consumption not dependent on prices or income. This is described as minimum threshold or nondiscretionary water use. Additionally, the Stone‐Geary framework is used to model the subsistence level of water consumption that is dependent on the temporal evolution of consumer habits and stock of physical capital. The main aim of this study is to analyse the impact of water‐saving habits and water‐efficient technologies on residential water demand, while additionally focusing attention on nondiscretionary uses. This is informed by an empirical application using data from a survey conducted among residents of Brisbane City Council, Australia. The results will be especially useful in the design of water tariffs and other water‐saving policies.