Urban water demand with fixed volumetric charging in a large municipality: the case of Brisbane, Australia

This paper uses suburb-level quarterly data to model residential water demand in Brisbane,Australia, from 1998 to 2003. In this system, residential consumption is charged usinga fixed annual service fee with no water entitlement followed by a fixed volumetriccharge per kilolitre. Water demand is specified as average quarterly household waterconsumption and the demand characteristics include the marginal price of water,household income and size, and the number of rainy and warm days. The findings notonly confirm residential water as price and income inelastic, but also that the priceand income elasticity of demand in owner-occupied households is higher than inrented households. The results also show that weather, particularly summer monthsand the number of rainy days, exerts a strong influence on residential water consumption.