The Influence of Rebate Programs on the Demand for Water Heaters: The Case of New South Wales
AbstractIn the past decade the Australian Federal government and state governments have established a wide range of programs to cut greenhouse gas emissions from all sectors. This paper examines the role of hot water system rebate programs in shifting the existing stock of electric water heaters toward more climate friendly versions using two unique data sets from New South Wales homeowners. The first data set is based on a survey of households who recently purchased a water heater and exploits a natural experiment created by the rebate program to quantify its effects. The other data set is based on a set of stated preference questions asked of households who own an older water heater and will in the reasonably near future face a replacement decision. We find that recent rebate programs significantly increased the share of solar/heat pump systems. For households without access to natural gas, this increased share comes directly from inefficient electric water heaters. For households with access to natural gas, older existing electric water heaters would likely have been replaced with gas water heaters in the absence of the rebate programs. The rebate program appears to be much less effective when water heaters are replaced on an emergency basis. Data from discrete choice experiments was analysed using several flexible choice models. A newly proposed model that combines a latent class approach with a random coefficients approach clearly dominates the other models in terms of statistical fit. Predictions based on this model estimate are reasonably consistent with actual purchase data. Results from it point to considerable heterogeneity with respect to household preferences toward different types of water heaters and with respect to the discount rates they hold.
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Bibliographic InfoPaper provided by Australian Agricultural and Resource Economics Society in its series 2011 Conference (55th), February 8-11, 2011, Melbourne, Australia with number 100731.
Date of creation: 2011
Date of revision:
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Climate change mitigation; Energy conservation programs; Natural experiments; Discrete choice experiments; Environmental Economics and Policy; Resource /Energy Economics and Policy;
Other versions of this item:
- Wasi, Nada & Carson, Richard T., 2013. "The influence of rebate programs on the demand for water heaters: The case of New South Wales," Energy Economics, Elsevier, vol. 40(C), pages 645-656.
- Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
- Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
- Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Costs; Distributional Effects; Employment Effects
- R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
- C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
- C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-03-05 (All new papers)
- NEP-DCM-2011-03-05 (Discrete Choice Models)
- NEP-ENE-2011-03-05 (Energy Economics)
- NEP-ENV-2011-03-05 (Environmental Economics)
- NEP-RES-2011-03-05 (Resource Economics)
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