University of Bejia1
Summary The economic literature analyzing and estimating the drinking water demand of Algerian households is quasi inexistent. We propose in this paper to fill this gap and to estimate a demand function of drinking water at the municipality level and in the presence of increasing block tariffs. For that purpose, we develop a two-stage estimation by using the specification proposed by Nordin (1976), and the applications on aggregated data by Corral et al. (1998) and Martinez-EspiÃ±eira (2003).Based on this work, we propose an approximation method proportion of the users in each consumption band, which allows modeling and estimation of the block selection made by users in the first step. The estimated demand function is performed in the second step. Technical variables and data on chemicals have therefore been introduced, in addition to the figures of consumption and water prices in the demand function. Econometric methods used are specific methods of data processing panel, which avoids any bias in the estimation of the coefficients. The estimate shows price elasticity and income elasticity via the variable now known in the literature as significant "differenceÂ», valued respectively at - 0.37 and - 0.05. These coefficients are used to simulate the impact of tariff reforms and their impact on the well-being of users. Keywords: water resources, domestic demand function, average price, time slots and frequency distribution, specific methods of data processing panel.