Estimation of Water Demand in Developing Countries: An Overview

A better understanding of household water use in developing countries is necessary to manage and expand water systems more effectively. Several meta-analyzes have examined the determinants of household water demand in industrialized countries, but little effort has been made to synthesize the growing body of literature evaluating household water demand in developing countries. This article reviews what is known and what is missing from that literature thus far. Analysis of demand for water in developing countries is complicated by abundant evidence that, contrary to what is observed in most developed countries, households in developing countries have access to, and may use more than one of several types of, water sources. The authors describe the different modeling strategies that researchers have adopted to estimate water demand in developing countries and discuss issues related to data collection. The findings from the literature on the main determinants of water demand in these countries suggest that, despite heterogeneity in the places and time periods studied, most estimates of own-price elasticity of water from private connections are in the range from -0.3 to -0.6, close to what is usually reported for industrialized countries. The empirical findings on decisions relating to household water sources are much less robust and should be a high priority for future research. JEL codes: D12, O13, Q25, Q56