Dynamic Modelling and Forecasting the Water Price: A Case of Medan, North Sumatera

Abstract

Water is an important element of life, hence must be preserved. In addition, the pricing of water supply must be consistent and optimal to ensure its sustainability. This paper describes the dynamic model in the forms of mathematical (structural) equations translated from the Regulation of the Minister of Domestic Affairs Indonesia, No. 23 Year 2006. This regulation has been used by Perusahaan Daerah Air Minum (PDAM) Tirtanadi Medan, North Sumatera in determining the water price. The model consists of several economic variables such as minimum wage, inflation, and subsidy that majorly influenced the forecasted water price.