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Estimating Water Demand Elasticity at the Intensive and Extensive Margin

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Abstract

I exploit a unique panel dataset of monthly water metering records and annual land- scape choices from satellite data for more than 170,000 households over 12 years to estimate price elasticity at the intensive and extensive margin. Higher water prices significantly increase the probability of adopting water conserving landscapes. The extensive margin only accounts for 2-3% of total elasticity in the short run and this increases to 6-24% in the long run. As cities transition away from water-intensive landscapes aggregate demand becomes less elastic and future conservation in the face of droughts becomes more challenging.

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  • Daniel A. Brent, 2016. "Estimating Water Demand Elasticity at the Intensive and Extensive Margin," Departmental Working Papers 2016-06, Department of Economics, Louisiana State University.
    • Handle: RePEc:lsu:lsuwpp:2016-06
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    Cited by:

    1. Daniel A. Brent & Corey Lott & Michael Taylor & Joseph Cook & Kimberly Rollins & Shawn Stoddard, 2020. "What Causes Heterogeneous Responses to Social Comparison Messages for Water Conservation?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 77(3), pages 503-537, November.
    2. El-Khattabi, Ahmed Rachid & Eskaf, Shadi & Isnard, Julien P. & Lin, Laurence & McManus, Brian & Yates, Andrew J., 2021. "Heterogeneous responses to price: Evidence from residential water consumers," Journal of Environmental Economics and Management, Elsevier, vol. 107(C).
    3. Robert Hahn & Robert D. Metcalfe & David Novgorodsky & Michael K. Price, 2016. "The Behavioralist as Policy Designer: The Need to Test Multiple Treatments to Meet Multiple Targets," Experimental Economics Center Working Paper Series 2016-05, Experimental Economics Center, Andrew Young School of Policy Studies, Georgia State University.

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