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Price and Non-Price Influences on Water Conservation: An Econometric Model of Aggregate Demand under Nonlinear Budget Constraint

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  • Corral, Leonardo
  • Fisher, Anthony C.
  • Hatch, Nile W.

Abstract

This paper develops a model of residential water demand under a nonlinear budget constraint. The theoretical model for an individual consumer is adapted to yield an aggregate model that preserves the structure of the individual demand function, and that can be used with aggregate (water district level) data. The model is used to study the influence of pricing and non-price conservation programs on consumption and conservation behavior in three water districts in the San Francisco Bay Area, over a 10-year period that includes both drought and normal years. Empirical results show that pricing can be effective in reducing water consumption, particularly during the annual dry season, and during longer drought episodes. The effect is mitigated when non-price conservation programs are included in the analysis. Among these, use restrictions and landscaping audits appear to be particularly effective in inducing conservation.

Suggested Citation

  • Corral, Leonardo & Fisher, Anthony C. & Hatch, Nile W., 1999. "Price and Non-Price Influences on Water Conservation: An Econometric Model of Aggregate Demand under Nonlinear Budget Constraint," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt3gx868tg, Department of Agricultural & Resource Economics, UC Berkeley.
    • Handle: RePEc:cdl:agrebk:qt3gx868tg
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    References listed on IDEAS

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    Cited by:

    1. Alawadhi, Ahmad & Burney, Nadeem A. & Gelan, Ayele & Al-Fulaij, Sheikha & Al-Musallam, Nadia & Awadh, Wafa, 2021. "The Effect of Conservation on Residential Fresh Water Consumption: Evidence from Kuwait," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 74(1), pages 47-82.
    2. Kertous, Mourad & Zerzour, Sahad, 2015. "To pay or not to pay? Water bill and delay in payment in Bejaia (Algeria): A duration analysis," MPRA Paper 67801, University Library of Munich, Germany.
    3. Henrique Monteiro, 2010. "Residential Water Demand in Portugal: checking for efficiency-based justifications for increasing block tariffs," Working Papers Series 1 ercwp0110, ISCTE-IUL, Business Research Unit (BRU-IUL).

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