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The impact of smart meters on residential water consumption: Evidence from a natural experiment in the Canary Islands

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  • Daminato, Claudio
  • Diaz-Farina, Eugenio
  • Filippini, Massimo
  • Padrón-Fumero, Noemi

Abstract

Smart meters can promote behavioral changes and water conservation by improving information and providing feedback about water consumption to households. In this paper, we evaluate a large-scale programme implemented by the municipal water company of La Laguna (Tenerife). Exploiting quasi-experimental variation brought about program, we estimate the effect of water meter replacement on measured water consumption and the behavioral effect of the installation of the smart metering technology allowing households to access daily water consumption and real-time feedback through an online portal. Our main empirical analysis employs a difference in differences identification strategy and uses annual consumption data from 51,674 households observed over 10 years. We find a positive effect of water meter replacement on measured water consumption. Our main finding is that providing access to the smart metering technology induces households to reduce consumption by around 2% on average. Our results point to consumers’ engagement with the information portal as the main mechanism behind the observed behavioral response.

Suggested Citation

  • Daminato, Claudio & Diaz-Farina, Eugenio & Filippini, Massimo & Padrón-Fumero, Noemi, 2021. "The impact of smart meters on residential water consumption: Evidence from a natural experiment in the Canary Islands," Resource and Energy Economics, Elsevier, vol. 64(C).
    • Handle: RePEc:eee:resene:v:64:y:2021:i:c:s0928765521000063
    DOI: 10.1016/j.reseneeco.2021.101221
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    Cited by:

    1. Elinder, Mikael & Hu, Xiao & Liang, Che-Yuan, 2021. "Water conservation and the common pool problem: Can pricing address free-riding in residential hot water consumption?," CERE Working Papers 2021:12, CERE - the Center for Environmental and Resource Economics.
    2. Koo, A Mi & Kim, Ju-Hee & Yoo, Seung-Hoon, 2022. "Household willingness to pay for a smart water metering and monitoring system: The case of South Korea," Utilities Policy, Elsevier, vol. 79(C).
    3. Luca Congiu & Ivan Moscati, 2022. "A review of nudges: Definitions, justifications, effectiveness," Journal of Economic Surveys, Wiley Blackwell, vol. 36(1), pages 188-213, February.
    4. Stefano Clò & Tommaso Reggiani & Sabrina Ruberto, 2023. "Consumption feedback and water saving: An experiment in the metropolitan area of Milan," MUNI ECON Working Papers 2023-02, Masaryk University.

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    More about this item

    Keywords

    Water conservation; Behavioral change; smart meter; natural experiment;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water

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