Water Demand Elasticities: Selection Effects in Meta-Analysis

A meta-analysis of reported water demand elasticities shows that publication selection bias results in water demand estimates that overstate price elasticities. The analysis uses panel data estimators to measure and adjust for publication bias. A random effects estimator is used to derive water demand elasticity estimates that are efficient and unbiased by selection effects. The sample mean elasticity for reported elasticities is -.37%. Once publication bias is removed, the mean elasticity estimate drops to -.08%. Indoor water demand is almost perfectly inelastic. Water demands and their elasticities are heterogeneous in specific uses and locations. Water demand elasticities vary by location, water use type, econometric approach and publication bias. Water use elasticities range up -1.48% for domestic irrigation demand in the southwestern US. Estimated elasticities are also higher when derived with discrete choice data and estimators.