The Economics of Urban Water Demand: The Case of Industrial and Commercial Water Use in Hawaii

The industrial and commercial establishments of the City and County of Honolulu (CCH) have increased their water consumption dramatically in recent years. This study examined water use in the food-processing industry, non-food processing industries, and the commercial sector in relation to price of water and output/sales of the industrial or commercial unit. The generalized least-squares (GLS) procedure was used to estimate the regression equations, although the results of ordinary least-squares(OLS) estimation are also presented. The study results showed sensitivity of water use in relation to price level in the case of the food-processingindustry and insensitivity in the non-food processing and commercial establishments. Analogous results were found with respect to water use and number of employees.