Price versus non-price approaches to urban water conservation: a case study for São Paulo, Brazil

Leonardo Poyo Chen, Verônica Inês Fernadez Orellano and Sérgio Goldbaum

EconomiA, 2025, vol. 27, issue 1, 20-40

Abstract: PurposeThis paper evaluates the effectiveness of price incentives in reducing residential water demand during the 2014 water shortage.Design/methodology/approachWe utilized a fixed effects panel data model and a diff-in-diff analysis.FindingsThe results revealed a significant decrease in water consumption during the early months of the water crisis in all municipalities, with a more pronounced effect in the MRSP compared to cities where price incentives were not applied. We estimate that the price incentives program reduced monthly water consumption by approximately 0.5 m3 per household. We also provide evidence that the impact of the water pressure reduction in pipelines was similar, while the financial burden program appears to have had a weaker effect. Finally, after all the adopted policies had ceased, the water consumption remained lower than the pre-crisis level in all municipalities.Originality/valueCompared to the existing literature, we used a different control group, based on water consumption in municipalities outside the MRSP and achieved opposing results.

Keywords: Residential water demand; Water crisis; Economic incentives; Diff-in-diff analysis (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eme:econpp:econ-10-2024-0150

DOI: 10.1108/ECON-10-2024-0150

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