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Precise estimates of demand elasticities for a given area may not be necessary for policy purposes. Given the general nature of the demand for urban water, simple cross‐sectional comparisons of prices and quantities in similar areas may be most reliable for policy use. Short‐run elasticities give little information for policy purposes. Comparison of well‐defined price and quantity data from five cities with similar arid environments suggests a long‐run price elasticity for residential water of about −0.5 over a wide range of water prices. The potential for price adjustments to affect use is enormous.
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Martin et al. (1986) studied this question.
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