Micro-economic analysis of domestic water demand: application of the pseudo-panel approach

Abstract

The main purpose of the work is twofold. First, we tried to identify the main determinants that may explain the consumption of residential water in Tunisia using the pseudo panel method. This technique proved its effectiveness to overcome the lack of panel data. Moreover, the comparison between the obtained results using this method and those calculated based on the cross-sectional data showed the robustness of the pseudo-panel estimators. In the second step, our goal examined the policies and strategic orientations that seemed to be useful to manage water consumption in Tunisia. Estimation results reveal that the income elasticity of Tunisian residential demand for water is of about 1.18% and price elasticity is around 0.34 confirming that residential water demand in Tunisia is inelastic. This analysis consolidates the assumptions highlighting a coupling between Economic Status and drinking water consumption, the synergy between the equipment rate and water demand, and the synergy between the type of housing structure and the drinking water demand. In addition, it also emphasized the coupling between the socio-professional category of the household head and water consumption, the coupling between household size and water consumption, and the classical economic assumption confirming that price elasticity is negative.

Keywords

• C23
• Q25
• Q28