Estimating the Urban Water Demand Function for Orumieh City

During the last century, rapid urbanization and population growth have resulted in water shortage and pollution, so it is necessary to consider water as an important economic goods and manage its utilization in economic way. In order to manage water demand, it is an important issue to get information about demand function. Thus in this paper we use the Stone-Gray utility function to derive demand function. Then we use a Vector Autoregressive Regressive (VAR) model for estimating water demand in Orumieh city for the period of1378-84. The results of the research indicate that: 1) Water demand is depend directly on the consumer income and indirectly on the price of water, 2) Water demand is inelastic respect to the income and price and also to the other goods prices, 3) Rainfall and temperature have insignificant impacts on the water demand, and 4) It is found that water is a necessary goods.