Do Water Audits Work?

Water suppliers are showing greater interest in using different mechanisms to promote conservation. One such mechanism is conducting home water audits, which involves assessing water use and providing tailored suggestions for conserving water for residential customers. Yet, very little is known about the economic impacts of these water audits. This paper helps fill this gap by implementing a natural field experiment in the United Kingdom. The experiment involves randomly allocating 45,000 water customers to a control group or to treatment groups that receive different behavioral encouragements to take-up an online water audit. Our analysis yields three main findings. First, encouraging subjects to participate in an audit with financial incentives reduces household consumption by about 17 percent over two months. Furthermore, we find that the size of the financial incentive used to encourage conservation matters for take-up, but not conservation. Second, notwithstanding these improvements in water conservation, the per capita net benefits of the intervention are close to zero under a wide range of assumptions. We also implement a marginal value of public funds approach that considers benefits and costs and we reach a similar conclusion. Third, we find that targeting of high users could double the effectiveness of the financial incentive interventions.