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The Influence of Rebate Programs on the Demand for Water Heaters: The Case of New South Wales

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  • Wasi, Nada
  • Carson, Richard T.

Abstract

In 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.

Suggested Citation

  • Wasi, Nada & Carson, Richard T., 2011. "The Influence of Rebate Programs on the Demand for Water Heaters: The Case of New South Wales," 2011 Conference (55th), February 8-11, 2011, Melbourne, Australia 100731, Australian Agricultural and Resource Economics Society.
  • Handle: RePEc:ags:aare11:100731
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Daniel A. Brent & Michael Ward, 2017. "Energy Efficiency and Financial Literacy," Departmental Working Papers 2017-04, Department of Economics, Louisiana State University.
    2. Eimear Leahy & Richard Tol, 2012. "Greener homes: an ex-post estimate of the cost of carbon dioxide emission reduction using administrative micro-data from the Republic of Ireland," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 14(3), pages 219-239, July.
    3. Doherty, Edel & Campbell, Danny & Hynes, Stephen, 2012. "Exploring cost heterogeneity in recreational demand," Working Papers 148832, Socio-Economic Marine Research Unit, National University of Ireland, Galway.
    4. Hlavinka, Alexander N. & Mjelde, James W. & Dharmasena, Senarath & Holland, Christine, 2016. "Forecasting the adoption of residential ductless heat pumps," Energy Economics, Elsevier, vol. 54(C), pages 60-67.
    5. Edel Doherty & Danny Campbell & Stephen Hynes, 2013. "Models of Site-choice for Walks in Rural Ireland: Exploring Cost Heterogeneity," Journal of Agricultural Economics, Wiley Blackwell, vol. 64(2), pages 446-466, June.
    6. Higgins, Andrew & McNamara, Cheryl & Foliente, Greg, 2014. "Modelling future uptake of solar photo-voltaics and water heaters under different government incentives," Technological Forecasting and Social Change, Elsevier, vol. 83(C), pages 142-155.
    7. repec:eee:enepol:v:113:y:2018:i:c:p:559-570 is not listed on IDEAS
    8. Wanwiphang Manachotphong & Jirawat Panpiemras & Nada Wasi, 2016. "The Role of Reimbursement Approaches on Healthcare Demand: The Case of Thai Civil Servants Medical Benefit Scheme," PIER Discussion Papers 48, Puey Ungphakorn Institute for Economic Research, revised Nov 2016.

    More about this item

    Keywords

    Climate change mitigation; Energy conservation programs; Natural experiments; Discrete choice experiments; Environmental Economics and Policy; Resource /Energy Economics and Policy;

    JEL classification:

    • 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 Adoption and 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; Probabilities
    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments

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