Managing a scarce resource in a growing Asian economy: Water usage in Hong Kong

An econometric analysis of Hong Kong's monthly per capita water usage for the 25-year period of April 1985 through March 2010 reveals that per capita usage is insensitive to price but dependent upon past usage, per capita income, weather, and seasonal factors, with rising income countering what would otherwise be a downward trend. Given Hong Kong's current inflationary environment and large government budget surplus, these findings affirm the Hong Kong Water Supplies Department's adopted strategy of total water management towards sustainable use of water resources, in lieu of either periodic service interruption or price increases as policy instruments.