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Algeria is one of the countries most affected by water scarcity (500m3 per capita per year). The country has long tried to develop new resources and has focused its policy on supply-side management. This approach now appears inadequate, and must be combined with a demand-side policy. Using panel data methodology we estimate a function of residential water demand in Bejaia province. We find that water subscribers respond weakly to price changes. A one percent increase in the water price reduces demand by only 0.42%. Moreover, our work shows that water rationing policy encourages over-consumption.