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Water Taxes and Consumer Behavior in France

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  • Simon Porcher

    (IAE Paris - Sorbonne Business School)

Abstract

Water taxes are employed to correct externalities associated with water pollution or resource scarcity and to raise government revenue. In this paper, using a dataset on more than 4,000 French municipalities, we directly examine how water taxes affect consumer behavior as distinct from tax-exclusive water prices. Our analysis shows that a 10-cent tax increase reduces water consumption by 0.26 percent, similarly to a 10-cent increase in the tax-exclusive water price. The responsiveness of consumers to tax and tax-exclusive price is important because it gives information about consumers' sensitivity to policy interventions versus market prices.

Suggested Citation

  • Simon Porcher, 2019. "Water Taxes and Consumer Behavior in France," Working Papers hal-02145848, HAL.
    • Handle: RePEc:hal:wpaper:hal-02145848
    Note: View the original document on HAL open archive server: https://hal.science/hal-02145848
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    References listed on IDEAS

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    1. Raj Chetty & Adam Looney & Kory Kroft, 2009. "Salience and Taxation: Theory and Evidence," American Economic Review, American Economic Association, vol. 99(4), pages 1145-1177, September.
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    Keywords

    Externalities; Water Utilities;

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