Price and Behavioural Signals to Encourage Household Water Conservation in Temperate Climates

Liang Lu, David Deller and Morten Hviid

No 2018-01, Working Paper series, University of East Anglia, Centre for Competition Policy (CCP) from Centre for Competition Policy, University of East Anglia, Norwich, UK.

Abstract: Water scarcity is a global concern. Even in non-drought environments the political and economic costs of developing water resources may favour water conservation. Using a single high price to constrain demand raises distributional and political challenges. Increasing block tariffs (IBTs) have been proposed as a potential solution, balancing incentives for water conservation with an equitable distribution of costs across households. An alternative approach that may side-step affordability concerns is to use non-price conservation interventions. We survey the literature on IBTs and behavioural interventions (a subset of non-price interventions) to assess their effectiveness, thereby highlighting the operational challenges of implementing effective IBTs. Robust evidence on behavioural interventions is limited, although, social comparisons appear to be effective for conservation. We discuss the implications of the evidence for the UK, a country with a temperate climate. We note that existing interventions have been typically implemented in response to drought situations, so one may question the validity of existing evidence for designing interventions in non-drought situations. We suggest an essential first step before implementing an IBT is research to understand a locality’s water consumers and their water demand. That many UK households have an unmetered water supply presents challenges both for gaining this understanding of demand and producing an evidence base around behavioural interventions.

Keywords: Increasing block tariffs; behavioural interventions; water conservation (search for similar items in EconPapers)
JEL-codes: D10 L95 Q21 Q25 Q28 (search for similar items in EconPapers)
Date: 2018-10-01
New Economics Papers: this item is included in nep-ene and nep-reg
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Citations: View citations in EconPapers (1)

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Juliette Hardman, Center for Competition Policy, University of East Anglia, Norwich Research Park, Norwich, NR4 7TJ, UK

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