Abstract: The vast literature estimating residential water demand assumes households are aware of and respond to changes in the tariffs or at least in the average price paid. However, in a framework where consumers face complex tariff schemes, and water bills tend to represent a reduced household expenditure, this awareness cannot be taken by granted. In this paper, we estimate a discrete continuous choice (DCC) model of residential water demand in Portugal that allows price elasticities to change as a function of consumers perception of their water bills. A control function approach is added to the DCC model to deal with the potential endogeneity of the perception indicator. We find water demand to be price-inelastic, but less so if consumers awareness about the amount they pay is higher. We also provide novel findings on the impact of environmentally-friendly behaviors, rainwater harvesting and availability of alternative water sources. Keywords: residential water demand estimation, perceptions, discrete continuous choice model, control function