Learning to live within your (water) budget: Evidence from allocation-based rates

María Pérez-Urdiales and Kenneth A. Baerenklau

Resource and Energy Economics, 2019, vol. 57, issue C, 205-221

Abstract: As allocation-based rates (ABR) become more widely adopted in the residential water sector, it is important to determine whether consumers interpret the water budget as a target for water use, or if they simply respond to the increasing block design. This paper exploits a natural experiment created when ABR were adopted by a California water district, that allows us to identify households with high water use as a treatment group. We find evidence of heterogeneous customer responses, and policy-induced behavioral changes that imply customers adjust their target level of water use based on the information signal provided by the water budget.

Keywords: Water demand; Allocation-based rates; Convergence; Regression discontinuity design; Difference-in-differences; Latent Class Models (search for similar items in EconPapers)
JEL-codes: Q20 Q25 Q28 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:resene:v:57:y:2019:i:c:p:205-221

DOI: 10.1016/j.reseneeco.2019.06.002

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