Modeling the impact of price and usage efficiency on domestic water demand in Saudi Arabia

The main objective of this paper is twofold. First, it seeks to identify the key drivers of domestic water demand in the Kingdom of Saudi Arabia (KSA) by estimating two sets of water demand models covering 1994 to 2023. The first model relates water demand to water price, income, and population, while the second model adds water use efficiency (WUE) as an additional explanatory variable to assess its impact on future domestic water demand. Second, the paper projects Saudi Arabia's domestic water demand through 2050 based on the estimates derived from both models. The estimation results show that all coefficients are significant and align with theoretical expectations. The estimated price elasticities of water demand are −0.17 and −0.20 for Models 1 and 2, respectively. The estimated elasticity of WUE is −0.39. Projections based on Model 1 suggest that total domestic water demand will rise from 3.6 billion m 3 /year in 2023 to approximately 8.14 billion m 3 /year by 2050. The results indicate that domestic water demand in KSA could be reduced by 32 % through improvements in WUE and by 4 % through water price reforms. These findings underscore the significant role of WUE enhancements in managing domestic water demand in KSA. • The study estimates the domestic water demand for Saudi Arabia. • The estimated price elasticity of water demand is between −0.9 and −0.20 • The income elasticities of water demand range from 0.50 to 0.63. • Projected results show that water demand will increase by 8.13 bm 3 /y by 2050. • Water demand in Saudi Arabia can be cut by 31 % by improving efficiency level.