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Estimating the Determinants of Residential Water Demand in Italy

The aim of this study was to estimate the determinants of residential water demand for chief towns of every Italian province, in the period 2007–2009, using the linear mixed-effects model estimated with the restricted-maximum-likelihood method. Results confirmed that the applied tariff had a negative effect on residential water consumption and that it was a relevant driver of domestic water consumption. Moreover, income per capita had a positive effect on water consumption. Among measured climatic and geographical features, precipitation and altitude exerted a strongly significant negative effect on water consumption, while temperature did not influence water demand. Further, data show that small towns in terms of population served were characterized by lower levels of consumption. Water utilities ownership itself did not have a significant effect on water consumption but tariffs were significantly lower and residential water consumption was higher in towns where the water service was managed by publicly owned water utilities. However, further research is needed to gain a better understanding of the connection between ownership of water utilities and water prices and water consumption.