This paper presents the results of an aggregate water demand model using data from water suppliers in the 17 Western United States. The model uses data from readily available water use, price, water quality, climate, income and other socio-economic data. Household water demand models are estimated for the combined 17 western states and for individual states. The final water demand model includes the natural log of use per household per year as a function of the natural log of price, water quality, median household income, the annual average Palmer Drought Severity Index, household size, population density, percentage of population 65 and over, home ownership percentage, percentage of population with health insurance, and a state dummy variable. The price elasticity estimate for the 17-state model is ？0.447 and state level elasticity estimates range from ？0.114 in North Dakota to ？0.775 in California. The aggregate model presented in this study is an improvement over previous studies because it is based on a large data set that covers a large geographic area. Greater variation in the magnitude of the explanatory variables included in the model supports robust econometric modeling and statistically significant results. The aggregate model can potentially be applied to a wide variety of areas in the western United States and can be used in a benefits transfer framework to estimate household water demand for areas within the western United States.
References
[1]
Alzahrani, F. and Collins, A.R. (2022) Impact of Public Water Supply Unreliability on Residential Property Prices in Marion County, West Virginia. Agricultural and Resource Economics Review, 51, 105-129. https://doi.org/10.1017/age.2021.24
[2]
Barakat & Chamberlin, Inc. (1994) The Value of Water Supply Reliability: Results of a Contingent Valuation Survey of Residential Customers. California Urban Water Agencies.
[3]
Griffin, R.C. and Mjelde, J.W. (2000) Valuing Water Supply Reliability. American Journal of Agricultural Economics, 82, 414-426. https://doi.org/10.1111/0002-9092.00035
[4]
Hensher, D., Shore, N. and Train, K. (2005) Households’ Willingness to Pay for Water Service Attributes. Environmental & Resource Economics, 32, 509-531. https://doi.org/10.1007/s10640-005-7686-7
[5]
Howe, C.W., Smith, M.G., Bennett, L., Brendecke, C.M., Flack, J.E., Hamm, R.M., et al. (1994) The Value of Water Supply Reliability in Urban Water Systems. Journal of Environmental Economics and Management, 26, 19-30. https://doi.org/10.1006/jeem.1994.1002
[6]
Koss, P. and Khawaja, M.S. (2001) The Value of Water Supply Reliability in California: A Contingent Valuation Study. Water Policy, 3, 165-174. https://doi.org/10.1016/s1366-7017(01)00005-8
[7]
Renwick, M.E. and Archibald, S.O. (1998) Demand Side Management Policies for Residential Water Use: Who Bears the Conservation Burden? Land Economics, 74, 343-359. https://doi.org/10.2307/3147117
[8]
Dalhuisen, J.M., Florax, R.J.G.M., de Groot, H.L.F. and Nijkamp, P. (2003) Price and Income Elasticities of Residential Water Demand: A Meta-Analysis. Land Economics, 79, 292-308. https://doi.org/10.2307/3146872
[9]
Espey, M., Espey, J. and Shaw, W.D. (1997) Price Elasticity of Residential Demand for Water: A Meta‐Analysis. Water Resources Research, 33, 1369-1374. https://doi.org/10.1029/97wr00571
[10]
Sebri, M. (2014) A Meta-Analysis of Residential Water Demand Studies. Environment, Development and Sustainability, 16, 499-520. https://doi.org/10.1007/s10668-013-9490-9
[11]
Moncur, J.E.T. (1989) Drought Episodes Management: The Role of Price. JAWRA Journal of the American Water Resources Association, 25, 499-505. https://doi.org/10.1111/j.1752-1688.1989.tb03085.x
[12]
San Diego County Water Authority (2021) Water Demand Forecast and Model Update 2020. Hazen and Sawyer.
[13]
Schneider, M.L. and Whitlatch, E.E. (1991) User‐Specific Water Demand Elasticities. Journal of Water Resources Planning and Management, 117, 52-73. https://doi.org/10.1061/(asce)0733-9496(1991)117:1(52)
[14]
Piper, S. (2003) Impact of Water Quality on Municipal Water Price and Residential Water Demand and Implications for Water Supply Benefits. Water Resources Research, 39, 1-9. https://doi.org/10.1029/2002wr001592
[15]
Hoffmann, M., Worthington, A. and Higgs, H. (2006) Urban Water Demand with Fixed Volumetric Charging in a Large Municipality: The Case of Brisbane, Australia. Australian Journal of Agricultural and Resource Economics, 50, 347-359. https://doi.org/10.1111/j.1467-8489.2006.00339.x
[16]
Santos, C.T.R.D. and Guidetti, B.M. (2025) Expansion of Piped Water and Sewer Networks: The Effects of Regulation. Inter-American Development Bank.
[17]
Brent, D.A. and Ward, M.B. (2019) Price Perceptions in Water Demand. Journal of Environmental Economics and Management, 98, Article 102266. https://doi.org/10.1016/j.jeem.2019.102266
[18]
Wichman, C.J. (2014) Perceived Price in Residential Water Demand: Evidence from a Natural Experiment. Journal of Economic Behavior & Organization, 107, 308-323. https://doi.org/10.1016/j.jebo.2014.02.017
[19]
Ito, K. (2014) Do Consumers Respond to Marginal or Average Price? Evidence from Nonlinear Electricity Pricing. American Economic Review, 104, 537-563. https://doi.org/10.1257/aer.104.2.537
[20]
Ward, F.A. and Loomis, J.B. (1986) The Travel Cost Demand Model as an Environmental Policy Assessment Tool: A Review of Literature. Western Journal of Agricultural Economics, 11, 64-178.
[21]
Cordell, H.K. and Bergstrom, J.C. (1989) Theory and Techniques for Assessing the Demand and Supply of Outdoor Recreation in the United States. USDA Forest Service, Research Paper SE-275. Southeastern Forest Experiment Station.
[22]
Environmental Working Group (2025) EWG Drinking Water Standards: No-Compromise Benchmarks to Fully Protect Public Health. https://www.ewg.org/sites/default/files/2021-11/EWG_TWDBStandards-Chart_11.2021_PP03.pdf
[23]
Kenney, D.S., Goemans, C., Klein, R., Lowrey, J. and Reidy, K. (2008) Residential Water Demand Management: Lessons from Aurora, Colorado. JAWRA Journal of the American Water Resources Association, 44, 192-207. https://doi.org/10.1111/j.1752-1688.2007.00147.x
[24]
Lyman, R.A. (1992) Peak and Off‐Peak Residential Water Demand. Water Resources Research, 28, 2159-2167. https://doi.org/10.1029/92wr01082
[25]
Nieswiadomy, M.L. (1992) Estimating Urban Residential Water Demand: Effects of Price Structure, Conservation, and Education. Water Resources Research, 28, 609-615. https://doi.org/10.1029/91wr02852
[26]
Puri, R. and Maas, A. (2020) Evaluating the Sensitivity of Residential Water Demand Estimation to Model Specification and Instrument Choices. Water Resources Research, 56, e2019WR026156. https://doi.org/10.1029/2019wr026156
[27]
King, D.M. and Mazzotta, M.J. (2024) Ecosystem Valuation Website. The U.S. Department of Agriculture, Natural Resources Conservation Service and National Oceanographic and Atmospheric Administration. https://www.ecosystemvaluation.org/
[28]
Kirchhoff, S., Colby, B.G. and LaFrance, J.T. (1997) Evaluating the Performance of Benefit Transfer: An Empirical Inquiry. Journal of Environmental Economics and Management, 33, 75-93. https://doi.org/10.1006/jeem.1996.0981
