Nondiscretionary residential water use: the impact of habits and water-efficient technologies

Several studies published in the last few decades have demonstrated a low priceelasticity 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.

Issue Date:
Apr 01 2014
Publication Type:
Journal Article
Record Identifier:
Published in:
Australian Journal of Agricultural and Resource Economics, Volume 58, Issue 2
Page range:

 Record created 2017-07-18, last modified 2018-01-23

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