Residential water demand in a transition economy: evidence from Poland

Abstract

This paper analyzes residential water demand in Poland and the determinants thereof, including both water tariffs and income levels. Information on the price and income elasticities of residential water demand is crucial for effective management of water demand. We carried out this empirical analysis using several panel-data models. The analysis is based on data provided by the urban municipalities, in which the number of the end-users connected to water supply networks exceeded 50,000. We focused on the larger cities to obtain sample homogeneity in terms of the access to water supply and sewage collection systems, as well as the income structure. We found that the indicators of price elasticity of residential water demand in Poland are similar to those being known from the relevant surveys conducted in Western Europe. However, the income elasticity is smaller in absolute terms when compared to that in countries with more developed economies. Based on the results obtained, our prediction is that the decreasing trend of individual water consumption in Poland will slow down in the next few years. Our study is one of the first to investigate the price and income elasticities of water demand in Poland, and also one of the first such ones carried out for economies in transition.