Water and Energy Price Impacts on Residential Water Demand in Copenhagen

While water price effects on residential water demand have been studied for several decades, the impact of energy prices does not seem to have received much attention. In this paper a residential water demand function-derived from a model of household production of final consumption goods taking water, energy, and an aggregate of other goods as inputs-is estimated on pooled time series data. We find negative energy cross-price elasticities around -0.2 and water price elasticities in the order of -0.1 or smaller.