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This paper analyses econometrically residential water demand in the three major urban areas of Cyprus, a semi-arid country with medium to high income levels. Water demand turns out to be inelastic, but not insensitive, to prices; price elasticity is less than unity in absolute terms, but significantly different from zero. The analysis further shows that periodic interruptions in household water supply, which were applied as an urgent water saving measure in 2008-2009, did not encourage water conservation among the population. The paper discusses these results, pointing at the need for appropriate water pricing policies and long-term planning in order to move towards sustainable water resource management.