Forecasting animal water demand: econometric and time series assessment

Lack of credible information on present and future livestock water demand and severe limitations of existing physical water demand models necessitate the development of sound livestock water demand forecasting models. The issue of accurate livestock water demand estimation and forecasting is further highlighted by the growing water scarcity problems and constant and/or decreasing supplies of water in Georgia. In the absence of accurate livestock water demand information, policy proposals and decisions regarding livestock water allocation would be inefficient, leading to the misallocation of limited water resources. Developing sound livestock water demand forecasting models requires a complete understanding of livestock supply response behavior under physical, economic, and institutional determinants. Especial efforts have been made to improve the existing livestock supply response models and their forecasting accuracy. For broilers and swine, dynamic supply response models were developed considering underlying biological features. The forecasting accuracy of broiler and swine supply response models were further assessed by developing univariate and structural time series models, respectively. A structural time series model with explanatory variables was used to model dairy cattle and beef cattle supply responses. The superior dairy cattle and beef cattle supply models were selected by analyzing different scenarios of deterministic and stochastic trend and seasonality components. In our analyses of broiler, swine, dairy cattle, and beef cattle supply response models, all economic variables yield expected signs and statistically significant results, demonstrating the importance of economic information variables to forecast numbers of livestock and poultry, and thereby animal water demand. The study yielded mixed results in terms of water demand forecasting, mostly because of the failure of the underlying ACT/ACF physical models to capture the ongoing changes in poultry, swine, dairy cattle, and beef cattle industries in Georgia.