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

Author

Listed:
  • Contreras, Ivette
  • Carrillo, Paul E.
  • Scartascini, Carlos

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.

Suggested Citation

  • Contreras, Ivette & Carrillo, Paul E. & Scartascini, Carlos, 2021. "Turn Off the Faucet: Solving Excess Water Consumption with Individual Meters," IDB Publications (Working Papers) 11714, Inter-American Development Bank.
    • Handle: RePEc:idb:brikps:11714
    DOI: http://dx.doi.org/10.18235/0003719
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    Cited by:

    1. Brewer, Dylan, 2022. "Equilibrium sorting and moral hazard in residential energy contracts," Journal of Urban Economics, Elsevier, vol. 129(C).

    More about this item

    Keywords

    Water consumption; Commons problem; Individualmeters; Price elasticity; Difference-in-difference;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • Q21 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Demand and Supply; Prices
    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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