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Demand Specification for Municipal Water Management: Evaluation of the Stone-Geary Form

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  • Sylvestre Gaudin
  • Ronald C. Griffin
  • Robin C. Sickles

Abstract

To specify demand in most water allocation problems, researchers face a tradeoff between flexibility and parsimony. Flexible forms are less constraining on elasticity estimates, but require large parameter sets that tend to cause poor out-of-sample forecasts and computational difficulties. Using a five-year panel of Texas municipalities, the parsimonious Stone-Geary form yields estimated demand functions that are comparable to flexible form results. The Stone-Geary specification also provides an estimate of the portion of water use that may not be responsive to price, and is useful in analysing price structures and designing conservation policies.

Suggested Citation

  • Sylvestre Gaudin & Ronald C. Griffin & Robin C. Sickles, 2001. "Demand Specification for Municipal Water Management: Evaluation of the Stone-Geary Form," Land Economics, University of Wisconsin Press, vol. 77(3), pages 399-422.
    • Handle: RePEc:uwp:landec:v:77:y:2001:i:3:p:399-422
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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