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A Data-Driven Model to Evaluate the Medium-Term Effect of Contingent Pricing Policies on Residential Water Demand
  • Taís Maria Nunes Carvalho,
  • Francisco de Assis Souza Filho
Taís Maria Nunes Carvalho
Universidade Federal do Ceará

Corresponding Author:taismarianc@gmail.com

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Francisco de Assis Souza Filho
Federal University of Ceara
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The relative scarcity of water resources have encouraged cities to create mechanisms to control water demand and avoid water stress. In the decision-making process, water companies need to assess the price influence on water demand predictions to design better policies. The aim of this study is to assess the medium-term effectiveness of the implementation of a contingent tariff and its consequences for water demand elasticity to price. A novel model that requires only secondary data is proposed, that can be useful for guiding the drought planning process. The methodology consists in a framework that provides monthly predictions of water demand at the household level, considering price, seasonality, and previous water use. The results indicated that the contingent tariff promoted a reduction of 11-15% in water demand, but at a higher cost for low income households. Also, reduction in water demand was found to be inelastic to price increase. Using google search hits as a proxy for public interest, we found that water cost has a higher influence on users decision to save water than drought awareness.
Apr 2021Published in Environmental Challenges volume 3 on pages 100033. 10.1016/j.envc.2021.100033