Water Consumption and Long-run Socio-economic Development: an Intervention and a Principal Component Analysis for the City of Milan

This paper analyses the evolution of water consumption in Milan during the twentieth century. Howev- er, dealing with a century time series raises some compli- cated statistic and econometric issues. To study the main research questions outlined by the literature, as the presence of consumption habits and the link between consumption and price, we use a quite original approach – based on intervention analysis and principal component analysis (PCA) – which seems to be more adequate than “ regres- sion-type ” approaches to study a so long time series. Results indicate (1) how some events have modified the normal evolution of per-capita water consumption; (2) that per- capita water consumption is a very persistent series, namely, that water users should have well-developed consumption habits; (3) that per-capita consumption and water price present a strong negative correlatio