Analyzing Impacts of Targeted Subsidies Plan on Demand for Residential Water of the Iranian Urban Households using Demand System Equations Approach

In this paper, we try to analyze the impacts of targeted subsidies plan and socioeconomic variables on demand for residential water of Iranian urban households. For this purpose, we use pooled data of 146729 urban households during 2007-2014 and estimate an Almost Ideal Demand System (AIDS) model using Seemingly Unrelated Regression (SUR). The results show that targeted subsidies plan has no significant effect on demand for urban residential water. The price and income elasticity’s of demand for residential water were estimated by -0.94 and 0.64, respectively. We also show that the household size and gender of household’s head are of positive and significant effects on residential water consumption, while literacy rate of household’s head and use of cloth washing machine affect negatively the demand for water. In addition, using dishwashing machine and size of household’s dwelling have no significant effects on residential water consumption.