The Factors Affecting Domestic Water Consumption in Portugal: An Econometric Approach

Water is a valuable resource that needs to be managed carefully. Therefore, sustainable water consumption is a critical issue, mainly in urban areas, where tourism activities are of great importance. In mainland Portugal, this has become a crucial matter, particularly because of climate limitations and the recent growth of the tourism sector. To manage water resources effectively, we must analyze the primary factors driving consumption. Therefore, an econometric model to identify the main factors is a relevant tool for policy design. This paper tries to fill this gap. In the first stage, an ordinary least squares (OLS) model was implemented. In a second stage, the autocorrelation is evaluated, and a weighted geographical regression (GWR) model is used to improve the previous results. The models were implemented in the 278 municipalities of continental Portugal, considering the average situation of the last decade. The results were promising since the OLS model presented an R2 of 0.42 identifying purchasing power, urban green spaces, tourism and education as the main explanatory factors for water consumption. The geographical weight regression presented an R2 of 0.646 proving the importance of considering spatial context for the identification of these factors’ influence on water consumption.