A long-run analysis of residential water consumption

The main originality of this paper is to empirically investigate the long-run relationship between average regional water consumption and its determinants. To do so, we use quarterly non-stationary panel data covering the six Tunisian regions for the period 1980.1 to 2007.4 and a breakdown into two consumption blocks (a lower and an upper block). We apply the panel cointegration tests and estimation developed by Pedroni (1999). We obtain a long-run price elasticity for the upper block that is greater than the corresponding one for the lower block. Our results show that water tariffs can play an active role in conserving the precious water resource in countries characterized by scarcity, volatility and low water quality as is the case with Tunisia.