Price elasticity of residential water demand: a Meta analysis of studies on water demand, (case study: Iran)

Contrary to the traditional supply policies, the integrated water resources management concentrates mainly on demand policies in which water tariffs are the most effective tools in achieving economic efficiency through management of water consumption. It is therefore important for policy makers and water managers to understand price elasticity for water demand presenting how changes in water tariffs affect water consumption. In this study, we reviewed 21 empirical case studies in Iran, including journal articles, master thesis and PhD dissertations, from which 65 estimates of price elasticity for residual water demand were collected. Using t-tests, the collected estimates of price elasticity found to be statistically different. Applying the meta-analysis approach that is focused on the two main objectives of publication bias and publication heterogeneity, it is attempted to explain the heterogeneity in the reported studies. Publication bias was tested using different techniques of meta-analysis. Using meta regression, impacts of theoretical specification, model specification, data characteristics and population the heterogeneity across the reported elasticity estimates are examined. Inclusion of income, use of time-series datasets, natural logarithm function of demand and application of stone greay theory are all found to affect the estimate of the price elasticity. The population density and use of OLS technique to estimate the demand parameters do not significantly influence the estimate of the price elasticity