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Do Conservation Policies Work? Evidence from Residential Water Use

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  • Oliver R. Browne
  • Ludovica Gazze
  • Michael Greenstone

Abstract

In response to the historic 2011–17 California drought, local governments enacted a raft of conservation policies, and little is known about which ones explain the sharp decline in residential water consumption. To answer this question, we use a novel data set of hourly water consumption data for more than 82,300 households in Fresno, California, where water consumption declined by nearly a third, and have three main findings. First, we estimate the price elasticity of demand for water to be 0.16 for marginal rates and 0.39 for average rates. Second, reducing the number of days where outdoor watering is allowable from 3 to 2 substantially decreases water use, despite the availability of opportunities to substitute between permitted and nonpermitted hours, days, and seasons. Third, “bully pulpit” pronouncements about the water crisis increased public awareness of drought conditions but did not contribute to water savings. Overall, higher water prices explain 40%–44% of the changes in residential water use observed during our sample period in Fresno, and reductions in the number of days when outdoor watering is allowable explain 45%–51% of these changes. However, the absence of experimental or quasi-experimental variation in these policies means that we interpret this associational evidence cautiously.

Suggested Citation

  • Oliver R. Browne & Ludovica Gazze & Michael Greenstone, 2021. "Do Conservation Policies Work? Evidence from Residential Water Use," Environmental and Energy Policy and the Economy, University of Chicago Press, vol. 2(1), pages 190-225.
  • Handle: RePEc:ucp:epolec:doi:10.1086/711310
    DOI: 10.1086/711310
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    Cited by:

    1. West, Jeremy & Fairlie, Robert W & Pratt, Bryan & Rose, Liam, 2021. "Automated Enforcement of Irrigation Regulations and Social Pressure for Water Conservation," Santa Cruz Department of Economics, Working Paper Series qt2bq5f1zq, Department of Economics, UC Santa Cruz.
    2. Elinder, Mikael & Hu, Xiao & Liang, Che-Yuan, 2021. "Water conservation and the common pool problem: Can pricing address free-riding in residential hot water consumption?," CERE Working Papers 2021:12, CERE - the Center for Environmental and Resource Economics.
    3. Browne, Oliver R. & Gazze, Ludovica & Greenstone, Michael & Olga Rostapshova, 2022. "Man vs. Machine : Technological Promise and Political Limits of Automated Regulation Enforcement," The Warwick Economics Research Paper Series (TWERPS) 1440, University of Warwick, Department of Economics.
    4. Jeremy West & Robert W. Fairlie & Bryan Pratt & Liam Rose, 2021. "Automated Enforcement of Irrigation Regulations and Social Pressure for Water Conservation," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 8(6), pages 1179-1207.
    5. Pratt, Bryan, 2023. "A fine is more than a price: Evidence from drought restrictions," Journal of Environmental Economics and Management, Elsevier, vol. 119(C).
    6. Erik Ansink & Carmine Ornaghi & Mirco Tonin, 2021. "Technology vs information to promote conservation: Evidence from water audits," BEMPS - Bozen Economics & Management Paper Series BEMPS80, Faculty of Economics and Management at the Free University of Bozen.
    7. Jessoe, Katrina & Lade, Gabriel E. & Loge, Frank & Spang, Edward, 2021. "Residential water conservation during drought: Experimental evidence from three behavioral interventions," Journal of Environmental Economics and Management, Elsevier, vol. 110(C).
    8. Bruno, Ellen M. & Jessoe, Katrina K. & Hanemann, Michael, 2023. "The Dynamic Impacts of Pricing Groundwater," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt2mx8q1td, Department of Agricultural & Resource Economics, UC Berkeley.

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    More about this item

    JEL classification:

    • Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
    • H4 - Public Economics - - Publicly Provided Goods
    • L95 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Gas Utilities; Pipelines; Water Utilities

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