Drought response in an election year: Evidence from Brazil

Claudio Lucinda and Sejal Patel David Grover

No 2019_09, Working Papers, Department of Economics from University of São Paulo (FEA-USP)

Abstract: Research on the impact of water conservation instruments rarely considers the role of electoral politics. This paper evaluates the response of a major state-owned water utility to the drought that occurred in the city of São Paulo, Brazil during 2014. The response coincided with an election for state governor. A difference-in-difference research design produces no evidence that a reward-based instrument implemented before the election reduced household consumption. Evidence is found that a penalty-based instrument implemented after the election reduced consumption by 4 to 8%. The implications of insulating water utilities’ drought response from the political-electoral cycle are discussed.

Keywords: Water conservation; policy instrument design; political budget cycles; drought (search for similar items in EconPapers)
JEL-codes: H12 Q25 Q28 (search for similar items in EconPapers)
Date: 2019-02-19
New Economics Papers: this item is included in nep-dev and nep-pol
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