Exploring behavioral responses to a residential water tariff reform

Sara Suárez-Fernández, María García-Valiñas and Roberto Martínez-Espiñeira
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Sara Suárez-Fernández: Universidad de Oviedo = University of Oviedo
María García-Valiñas: Universidad de Oviedo = University of Oviedo
Roberto Martínez-Espiñeira: MUN - Memorial University of Newfoundland = Université Memorial de Terre-Neuve [St. John's, Canada]

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Abstract: Water demand is often found to be relatively price-inelastic, with substantial percentages of water consumption irresponsive to price changes. This does not mean that households are insensitive to price changes or unresponsive to tariff reforms. In order to explore the latter, and using Latent Class Models, we classified households into a series of distinct types according to how they switch between consumption tiers in response to changes in their water tariff. We then identified key drivers of this switching behavior, proposing that not only tariff-related variables but also sociodemographic, attitudinal, and information conditions define switching profiles. Our empirical exercise exploits information on water consumption and tariffs from 878 households in Granada (Spain) for the years 2010 and 2011 (when a new tariff structure was implemented), as well as a survey that collected additional information about household characteristics.

Keywords: Demand Management Policies; Latent Class Model; Increasing block prices (search for similar items in EconPapers)
Date: 2022-10
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Published in Water Resources and Economics, 2022, 40, pp.100211. ⟨10.1016/j.wre.2022.100211⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04067492

DOI: 10.1016/j.wre.2022.100211

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