Abstract
During droughts, governments and water suppliers typically implement non-price policies to encourage water conservation. The state of Pennsylvania requests voluntary reductions in residential water use during moderate droughts and imposes mandatory restrictions during drought emergencies. This study utilizes data on household water consumption to measure the effectiveness of the water use restrictions in Pennsylvania during the moderate drought years 2015-2017. Results suggest that voluntary water use restrictions have smaller than desired effects and that the effects are larger the higher the marginal price of water, perhaps reflecting a trade-off between non-monetary benefits and the welfare loss from reducing water usage. The effectiveness of voluntary water use restrictions also is found to increase with the length of the drought.
Highlights
It is widely expected that freshwater scarcity will become more common in regions around the world due to population growth, rising consumer demand for water-intensive products and services, environmental demands, pollution, and climate change
The present study contributes to this literature by analyzing data on household water consumption in Pennsylvania to measure the effectiveness of water use restriction in counties experiencing moderate drought conditions during the years 2015-2017
The findings show that the effectiveness of voluntary water use restrictions increases with the length of the drought
Summary
It is widely expected that freshwater scarcity will become more common in regions around the world due to population growth, rising consumer demand for water-intensive products and services, environmental demands, pollution, and climate change. The present study contributes to this literature by analyzing data on household water consumption in Pennsylvania to measure the effectiveness of water use restriction in counties experiencing moderate drought conditions during the years 2015-2017. Another contribution is the theoretical and empirical examination of the conjecture that the higher the price of water, the more responsive residential water users are to requests for voluntary reductions in water use. It examines how the welfare loss from a percentage reduction in water usage varies with the price of water.
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