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  • Thumbnail for Residential water pricing and demand : an analysis of water consumption in Colorado Springs, Colorado
    Residential water pricing and demand : an analysis of water consumption in Colorado Springs, Colorado by McNerney, Matthew J.

    Scarcity of water resources necessitates an understanding of residential water pricing and demand, two factors certain to affect water usage in the coming years. This paper pursues a discussion of water pricing theory and previous studies on residential water demand. The culmination of the paper is an analysis of residential water demand in Colorado Springs, Colorado, a city reliant on water from the Colorado River Basin, a seriously stressed water system. A fixed-effect regression with Driscoll-Kraay standard errors is utilized to analyze a panel data set providing average monthly residential water consumption per cubic feet (CF), for forty water consumption zones over the ten-year period January 2000 to December 2009. The study analyzes a number of exogenous variables including average education level to determine the influence of less obvious factors on residential water consumption. Main findings indicate increases in most measures of wealth corresponded positively with residential consumption, but not all. Above average education levels of certain age groups and household value are suggested to have negative relationships with water consumption, so that areas with above average education levels of 18-24 year olds are using less water. For the stressed Colorado River Basin these finding suggest increased investment in education, and full accounting for the price of water resources under block rate schedules will serve effective tools for water demand management.