The Estimation of Water Demand Function of Household Sector According to Non Liner Pricing Through Discrete - continues Choice Model (The Case Study of Tehran City During 2002 to 2006)

The scarcity of water is the result of the recent successive drought in most country's districts. The increase of demand due to the increase of population and also inappropriate growth of supply according to the high cost of production process and therefore distribution, arise a big concern for the water and wastewater companies. Therefore the provision of water supply for consumers emphasizes on the urge of the management policies more than ever. Knowing the consumer behavior, in this regard, is the first and the most important step. In this study, to reach this objective, the function of household water demand in structure of block pricing in Tehran was estimated by using household budget data, through discrete – continues choice model and maximum likelihood approach. The results show that price and income parameters have expected sign. The calculated unconditional elasticties show that consumers’ sensitiveness for price fluctuations in the structure of block pricing are against zero. Therefore, the policy of price reform in the structure of block pricing can be used as an effective tool in the management of consumption.