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Turn Off the Faucet: Solving Excess Water Consumption with Individual Meters

Ivette Contreras, Paul E. Carrillo and Carlos Scartascini ()

No 11714, IDB Publications (Working Papers) from Inter-American Development Bank

Abstract: When consumption of water and other utilities is measured collectively and payment for such services is equally shared among members of the group, individuals may use more than what is socially optimal. In this paper, we evaluate how installation of individual meters affects water consumption. Using rich administrative data from the public water utility company in Quito, Ecuador, it is estimated that water consumption decreases by about 8% as a result of the introduction of individual metering. The effect is large and economically significant: in order to obtain the same effect prices would have to double. Individual water metering could be a useful tool to curve down consumption in both developing and developed countries.

Keywords: Water consumption; Commons problem; Individualmeters; Price elasticity; Difference-in-difference (search for similar items in EconPapers)
JEL-codes: D12 D62 Q21 Q25 Q58 (search for similar items in EconPapers)
Date: 2021-10
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Handle: RePEc:idb:brikps:11714