Examining the Long-Run and Short-Run Relationship between Water Demand and Socio-Economic Explanatory Variables: Evidence from Amman

Abstract

This study investigates the key factors that influence household water usage in Amman, Jordan, with the aim of improving water management practices in a region facing significant scarcity. The research focuses on factors such as temperature, water pricing, system input, and family size. The Vector Error Correction Model with Exogenous Variables (VECMX) is applied to data from 1980 to 2015 to provide insights into consumption patterns, both in the short-term and long-term. The results show that family size and marginal costs significantly impact long-term water demand, while system input and family size influence short-term water demand. The study also finds that water pricing has a limited impact on consumer behavior, indicating inelasticity. Temperature and income, however, did not emerge as significant determinants. These findings highlight the need for water management policies in arid areas like Amman to prioritize factors other than price, such as household size and water infrastructure, to establish more effective strategies for conserving water.