Residential water demand in the Slovak Republic

New Horizons in Environmental Economics seriesInternational audienceThis study investigates the residential water demand in the Slovak Republic. The demand model is estimated on a sample of 71 municipalities observed from 1999 to 2001. Three different functional forms for water demand have been estimated and compared: a lin-lin specification, a log-log form and a Stone-Geary function. First, the residential water demand in the Slovak Republic appears to be inelastic, but imperfectly, with the three econometric specifications. Using the Stone-Geary specification for instance, we get a short-term price elasticity varying from –0.35 to–0.50. Slovak consumers are price reactive and the water price can be used as an economic tool to indicate resource scarcity. Second, the price sensitivity threshold using the Stone-Geary specification is estimated at 31.5 cubic meters per person and per year, a level still lower than the average water consumption per person in 2001, 41.5 cubic meter