Estimating water demand under increasing-block tariffs using aggregate data and proportions of users per block

The price specification suggested by Nordin (1976) for the analysis of demand under block tariffs is applied to estimate water demand functions using aggregate data from the Northwest of Spain. The traditional way of using Nordin's specification when only aggregate data are available (using values of marginal price and difference faced by the average user) is compared with the theoretically correct one. The latter uses the average marginal price and the average difference, these averages being weighted by the proportion of users per block. The availability of data on the proportion of users per block permits also the explicit modelling of the choice of block. The results show that, in the sample analyzed, the values of price elasticity under the traditional specification and the more innovative one are not significantly different.