Study Reveals Water Demand Estimates Overstate Price Elasticities
A study on water demand found that previous estimates of how much water people use are often too high because of biased data selection. By using different statistical methods, the researchers corrected this bias and found that the actual elasticity of water demand to price changes is lower than previously thought. Indoor water use is not very sensitive to price changes. Water demand varies depending on where and how it is used, with irrigation in the southwestern US being the most responsive to price changes. Different methods of analysis also affect the results, with some showing higher elasticities than others.