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Heterogeneous Responses to Water Conservation Programs: The Case of Residential Users in Los Angeles

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  • Hanemann, W. Michael
  • Nauges, Celine

Abstract

We propose a detailed analysis of heterogeneity in households’ responses to water conservation programs (price increase, voluntary and mandatory conservation) during periods of water shortage. Using a unique dataset covering water consumption of all residential users in Los Angeles (California) during the drought (1988-1992), we show that households generally were responsive to the conservation measures but that the magnitude of households’ responses varies depending on the instrument and on households’ characteristics, in particular the size of their lot. Price elasticity is estimated between –0.29 and –0.47 in the high season (June-October), and between 0 and –0.19 in the low season (November-May). Results suggest that the voluntary conservation program [resp. mandatory conservation program] induced a reduction in water use which varies from 1 to 13% [resp. 21% to 29%] depending on the season and the size of the lot. The achieved reduction in consumption is however very similar across households. These data also allow us to compare the effectiveness of price and nonprice policies in terms of water savings. Finally, welfare calculations suggest that households with the smallest lot sizes (and lowest income) suffered the greatest loss during the implementation of the water conservation programs.

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  • Hanemann, W. Michael & Nauges, Celine, 2005. "Heterogeneous Responses to Water Conservation Programs: The Case of Residential Users in Los Angeles," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt1s43k3fd, Department of Agricultural & Resource Economics, UC Berkeley.
    • Handle: RePEc:cdl:agrebk:qt1s43k3fd
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    1. Jasper M. Dalhuisen & Raymond J. G. M. Florax & JHenri L. F. de Groot & Peter Nijkamp, 2003. "Price and Income Elasticities of Residential Water Demand: A Meta-Analysis," Land Economics, University of Wisconsin Press, vol. 79(2), pages 292-308.
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    5. Renwick, Mary E. & Green, Richard D., 2000. "Do Residential Water Demand Side Management Policies Measure Up? An Analysis of Eight California Water Agencies," Journal of Environmental Economics and Management, Elsevier, vol. 40(1), pages 37-55, July.
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    Cited by:

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    2. Havranek, Tomas & Irsova, Zuzana & Vlach, Tomas, 2016. "Publication Bias in Measuring the Income Elasticity of Water Demand," MPRA Paper 75247, University Library of Munich, Germany.
    3. Henrique Monteiro, 2010. "Residential Water Demand in Portugal: checking for efficiency-based justifications for increasing block tariffs," Working Papers Series 1 ercwp0110, ISCTE-IUL, Business Research Unit (BRU-IUL).
    4. Tomas Havranek & Zuzana Irsova & Tomas Vlach, 2018. "Measuring the Income Elasticity of Water Demand: The Importance of Publication and Endogeneity Biases," Land Economics, University of Wisconsin Press, vol. 94(2), pages 259-283.
    5. Guillermo Ignacio Acuña & Cristián Echeverría & Alex Godoy & Felipe Vásquez, 2020. "The role of climate variability in convergence of residential water consumption across Chilean localities," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 22(1), pages 89-108, January.
    6. Kertous, Mourad & Zerzour, Sahad, 2015. "To pay or not to pay? Water bill and delay in payment in Bejaia (Algeria): A duration analysis," MPRA Paper 67801, University Library of Munich, Germany.
    7. Hanna Hayden & Tsvetan Tsvetanov, 2019. "The Effectiveness of Urban Irrigation Day Restrictions in California," Water Economics and Policy (WEP), World Scientific Publishing Co. Pte. Ltd., vol. 5(03), pages 1-29, July.

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