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Effectiveness of Conservation Pricing in Reducing Water Demand, Evidence from Increasing Block Rate Structures

Project ID: 414
Principal Investigator: Steven Piper
Research Topic: Water Marketing
Funded Fiscal Years: 2011 and 2013
Keywords: None

Project Abstract

This analysis uses household data from water agencies in California and Nevada to evaluate the influence of price, rate structure, a recession, and other variables on water demand. The estimated nominal price elasticity ranges from -0.24 to -0.31. The number of price tiers is estimated to have a negative effect on water use, with an "elasticity" ranging from -0.11 to -0.13. The price elasticity of demand during the recession was approximately 14% greater than when there was a recession.

Contributing Partners

None

Research Products

Bureau of Reclamation Review

The following documents were reviewed by experts in fields relating to this project's study and findings. The results were determined to be achieved using valid means.

The Influence of Conservation Pricing and Other Non-Price Factors on Residential Water Demand (final, PDF, 730KB)
By Steven Piper
Report completed on May 29, 2014

This analysis uses household data from water agencies in California and Nevada to evaluate the influence of price, rate structure, a recession, and other variables on water demand. The estimated nominal price elasticity ranges from -0.24 to -0.31. The number of price tiers is estimated to have a negative effect on water use, with an "elasticity" ranging from -0.11 to -0.13. The price elasticity of demand during the recession was approximately 14% greater than when there was a recession.
Keywords: price elasticity of demand, tiered pricing, water conservation

This information was last updated on November 27, 2014
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