Environmental Policy
 

Study

Water Demand Estimation Under Data Duress

Most water demand analysis obtains its identification of price responsiveness either through a diversity of pricing structures across a long time horizon within a single municipality or across multiple municipalities, usually located in different geographic areas. This provides little guidance if the pricing structure shows little change or if the geographic areas are in very diverse climatic zones.

We propose an alternative approach that allows us to estimate price responsiveness for a single water provider with very little change in both the price and pricing structure. Additionally, we estimate a structural model for the Phoenix metro area, as different households may have differing water “commitments” based on the capital structure of the house.