Modeling of Residential Water Demand Using Random Effect Model,Case Study: Arak City

The present study tries to apply the “Partial Adjustment Model” and “Random Effect Model” techniques to the Stone-Greay’s linear expenditure system, in order to estimate the "Residential Seasonal Demand" for water in Arak city. Per capita water consumption of family residences is regressed on marginal price, per capita income, price of other goods, average temperature and average rainfall. Panel data approaches based on a sample of 152 observations from Arak city referred to 1993-2003. From the estimation of the Elasticity-price of the residential water demand, we want to know how a policy of responsive pricing can lead to more efficient household water consumption inArakcity. Results also indicated that summer price elasticity was twice the winter and price and income elasticity was less than 1 in all cases.