Do Increasing Block Rate Water Budgets Reduce Residential Water Demand? A Case Study in Southern California - eScholarship
2014
This study investigates the effect of introducing a fiscally neutral
increasing block-rate water budget price structure on residential water
demand. We estimate that demand was reduced by at least 18 percent,
although the reduction was achieved gradually over more than three years.
As intermediate steps the study derives estimates of price and income
elasticities that rely only on longitudinal variability. We investigate
how different subpopulations responded to the pricing change and find
evidence that marginal, rather than average, prices may be driving
consumption. Additionally, we derive alternative rate structures that
might have been implemented, and assess the estimated demand effects of
those rate structures.
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