Dear Alemu Woldesenbet ,
you question is not properly clear.
demand functions can be estimated using econometric and mathematical programing methods. and also can be modeled using system dynamics.
which method do you prefer to use?
every methods have particular sofware...
please mention what type of data you have (cross-sectional, time series and pane)
purpose of your study must be clear, too.
wish my answer doesn't be confusing!
Water demand estimation for a basin should be determined by prospecting each user's demand. Users can be classified in consumptive users such as urban, farmers, industries, power generation, and non-consumptive users, which implies that the water may be recovered after use. Urban uses can be segregated into domestic (household), municipal (covers also commercial and services demands) and industrial water demands are typically based on projections of population and socio-economic activities. Public water supply authorities in the basin are the best source of urban demand. If this information is not available, information about population, expected growth rates and water consumption per capta can be used to provide your own estimation. Industrial demand depends on the type of industries presented in the basin and is harder to estimate. Agricultural water demand is usually the higher demand and depends on different factors such as types of crops and soils and irrigation efficiency and climatic conditions.
If you want more information, I recommend the book "Water Resource Systems Planning and Management " by Loucks and Beek which you can download for free at: Book Water Resource Systems Planning and Management
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