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The importance of competition between rural and urban uses for water will likely increase, especially in developing countries. We examine residential water demand in the context of a developing country facing the potential climate change effects, with significant changes in incomes, household size, poverty rates and levels of urbanization. Using Chilean municipal-level panel data (1998-2010), we estimate price and income elasticities, and the water-demand response to climate and socio-demographic variables. Impacts of variation in season averages of precipitation and temperature are statistically significant, but only the variation of seasonal average temperature, the temperature deviations about seasonal averages, and the average seasonal rainfall in northern Chile appear to be of practical, economic significance. More urbanized localities have higher per-household water use and reduced sensitivity to temperature variations. Projected water use on average would increase due to climate changes, but by small amounts in the order of one to two percent.


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