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1 Journal of Water and Land Development

1 2021

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Water demand time series forecast by autoregressive distributed lag (ARDL) co-integration model

Telfah Duaa B., Louzi Nawal, AlBashir Tala M.

Journal of Water and Land Development

2021

no. 50

195--206

This article examines the short- and long-run effects of water price, system input, income, temperature on domestic water demand for Amman area over the period of 1980–2012. An empirical, dynamic autoregressive distributed lag (ARDL) model for water demand is developed on a yearly basis. This approach is capable of testing and analysing the dynamic relationship with time series data using a single equation regressions. Results show the ability of the model to predicting future trends (short- and long-run association). The main results indicate that water demand in limited water environment is partially captured in the long-run by the amount of water reaching the customer. The short- and long-run elasticities of water price (–0.061, –0.028) and high temperature (0.023, 0.054) indicate inelastic behaviour on water demand both in short- and long-run, while the lagged water price has a significant effect on demand. Income represented by gross domestic product (GDP) slightly affects water consumption in the long-run and insignificantly in the short-run (0.24, 0.24). Water consumption is strongly linked to consumption habits measured by lagged billed amount 0.35, and is strongly linked to amount of supplied water both in short- and long-run (0.47, 0.53). These results suggest that water needs should be satisfied first to allow controlling water demand through a good pricing system. Moreover, the association identified between demand and water system input, and the lesser elasticities of water price and other explanatory variables confirm the condition of water deficit in Amman area and Jordan. The results could be rolled out to similar cities suffering scarce water resources with arid and semi-arid weather conditions.