Do Increasing Block Rate Water Budgets Reduce Residential Water Demand? A Case Study in Southern California

Kenneth A. Baerenklau, Kurt Schwabe () and Ariel Dinar

No 170019, 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota from Agricultural and Applied Economics Association

Abstract: This study investigates the effect of introducing a fiscally neutral increasing block-rate water budget price structure on residential water demand. We estimate that demand was reduced by at least 18 percent, although the reduction was achieved gradually over more than three years. As intermediate steps the study derives estimates of price and income elasticities that rely only on longitudinal variability. We investigate how different subpopulations responded to the pricing change and find evidence that marginal, rather than average, prices may be driving consumption. Additionally, we derive alternative rate structures that might have been implemented, and assess the estimated demand effects of those rate structures.

Keywords: Demand and Price Analysis; Environmental Economics and Policy (search for similar items in EconPapers)
Pages: 22
Date: 2014
New Economics Papers: this item is included in nep-agr and nep-env
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Citations: View citations in EconPapers (24)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea14:170019

DOI: 10.22004/ag.econ.170019

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