Price and Non-Price Influences on Water Conservation: An Econometric Model of Aggregate Demand under Nonlinear Budget Constraint

This paper develops a model of residential water demand under a nonlinear budget constraint. The theoretical model for an individual consumer is adapted to yield an aggregate model that preserves the structure of the individual demand function, and that can be used with aggregate (water district level) data. The model is used to study the influence of pricing and non-price conservation programs on consumption and conservation behavior in three water districts in the San Francisco Bay Area, over a 10-year period that includes both drought and normal years. Empirical results show that pricing can be effective in reducing water consumption, particularly during the annual dry season, and during longer drought episodes. The effect is mitigated when non-price conservation programs are included in the analysis. Among these, use restrictions and landscaping audits appear to be particularly effective in inducing conservation.


Issue Date:
1999
Publication Type:
Working or Discussion Paper
PURL Identifier:
http://purl.umn.edu/7155
Total Pages:
40
Series Statement:
CUDARE Working Paper
881




 Record created 2017-04-01, last modified 2017-08-23

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