Evaluating Effective Factors on Household Water Consumption and Forecasting its Demand: Panel Data Approach

Document Type : Research Paper


1 Assoc. Prof. of Economics, Ferdowsi University of Mashhad

2 Assoc.. Prof. of Water Eng., Ferdowsi University of Mashhad

3 M.Sc. of Economics, Ferdowsi University of Mashhad


The increasing trend of water demand is an inevitable problem all over the world. Considering the population growth, industry development, improvement of sanitation level and public welfare, renewable resources per capita like water is decreasing. In this paper, water demand is derived using Stone-Geary function and it is estimated using the random effects model. The used data is panel and yearly and is related to 266 household during 1382-1386 in Neishabour.Water demand is estimated using average price, income per capita, price index of goods and services and average temperature variables. The price elasticity is -0.15, income elasticity is 0.15 and cross-elasticity is -0.00025. It is shown that water demand has low elasticity with respect to income and price and it is complementary with other goods. Furthermore, the average temperature is not significant. Three scenarios are used to forecast water consumption. The results show that if the price of water does not increase, the water consumption per capita of household will increase with increase of income per capita. Also an increase in tariffs will decrease the per capita water consumption household.


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