Based on a theoretical model that studies how individuals respond to a commodity uncertain in supply, this paper estimates some demand functions for water in situations where supplies are known to be stochastic. The model is applied to data consisting of a sample of Massachusetts towns, separate functions being estimated for household and in-dustriM demand. Two cross sections are estimated, one for 1962 and one for 1965, the beginning and the end, respectively, of the New England drought.As far as household demand is concerned, price, uncertainty as measured by supply variance, and particularly housing space are significant, whereas for industrial demand only the first two variables are significant. The results also indicate that firms are more responsive than households to both price and uncertainty and that their response to uncertainty lessened as a result of the drought, an implication that agrees with the theoretical model. ess [Turnovsky, 1969].Much of the work in Turnovsky [1968, 1969] is devoted to determining how the individual responds to parameter changes and in particular how he responds to uncertainty as measured by Ox?/Oa•% In this paper we endeavor to test empirically some of the implications of the theoretically derived model. (It is not necessary to give any details of the model here. The interested reader is referred to Turnovsky [1968, 1969], where they are described in detail. For our purposes all that is relevant is that they give rise to a set of demand functions of the form (1.2).) We have chosen to apply the model to the estimation of the planned demand for water, since in certain regions water supply has been extremely variable in supply during recent years. Moreover, our theory deals specifically with nonstorable commodities and, as most individuals do not have facilities to store water, water is a particularly appropriate commodity to act as a testing ground.There are, however, several stages in transforming the function (1.2) into one suitable for practical estimation and testing. First is the problem of aggregating these individual rela- 350 The Demand for Water 351 tionships to levels at which data are available. Very few data describing individual behavior are available, so that some aggregation is inevitable. In the application of this paper, data are available at the municipal level, so that aggregation to this level is implicit in our empirical work. Whether aggregate demands will have the same characteristics as individual demands is not always clear and will depend, for example, on the relative weights of the individuals in the aggregation. However, if we assume, as we shall, that all individuals respond in the same direction to all parameters, then the aggregate response will behave similarly.