Residential Water Demand Elasticity in Greater Amman Area

Jordan will face more water shortage in the future due to the imbalance between the scarce water resources and the growing demand that threatens to reduce the availability of water, especially for domestic uses. This study aimed to express the household water demand function by estimating two water demand models and test the significance of different household socioeconomic factors and the effect they have on the residential water demand. A panel of 600 observations were drawn from the field survey that was as part of MEDITATE project and used to estimate household water demand and the per capita water demand models using Two-Stage Least Squares (2SLS) method taking different variables into consideration such as marginal price, rate structure premium and level of household income. The results showed that the estimated demand for both models was price inelastic (-0.52) which shows a weak response to price change. The results also showed a positive inelastic income elasticity. The household size and the educational level both significantly affect the level of water demand. The results showed that water demand price elasticity and income elasticity are both inelastic, meaning that pricing policies will not be an effective way to manage water demand. The results showed that price responsiveness is low when it comes to residential water use; large price increases would be required in order to eliminate small shortages. The more suitable approach towards conserving water consumption is to combine pricing policies with other water demand management measures such as informative campaigns, increasing the public s awareness regarding water scarcity problem and encouraging the use of water conservation device in order to achieve the desired goals