The Role of Household Heterogeneity on Unplanned Water Demand Shifts

In this study, we investigate whether differences in sociodemographic and housing characteristics may lead to heterogenous reactions on water demand across households in the event of an unexpected shock. In this sense, we estimate a switching regression model for residential water usage in Gijón, Spain, between 2017 and 2021, exploiting the exogenous impact of the COVID-19 pandemic and various movement restriction phases. A rich dataset that integrates real data on water consumption and pricing, alongside reported household and housing characteristics, allows us to effectively control the heterogeneity of water consumers and test changes in marginal effects over time. Our findings reveal a significant increase in average water consumption coinciding with the onset of the pandemic. This increase in water usage was particularly pronounced among households with more members and those residing in older houses that also owned outdoor amenities such as gardens or swimming pools, among other socioeconomic and housing characteristics. Additionally, our study indicates that the price elasticity of water demand did not significantly differ from zero during the periods of the State of Alarm and the New Normal. This suggests that the implementation of movement restrictions and teleworking may have amplified households’ preferences and dependence on water, thus fostering increased water consumption. Furthermore, our results point towards unchanged residential information or knowledge of the expense of water services despite the time spent at home.