NONPRICE WATER CONSERVATION PROGRAMS AS A DEMAND MANAGEMENT TOOL1

Abstract

ABSTRACT: Water providers nationwide are implementing nonprice conservation measures such as education, public information, appliance retrofit and ordinances, with the expectation that these programs will reduce residential water demand. However, little empirical information exists on the effectiveness of nonprice conservation programs in reducing water demand. Previous econometric studies indicate these programs have had minimal impact. We examine the types and number of major nonprice conservation programs that have been implemented during an 11‐year period in seven cities in the southwestern United States. A cross sectional, monthly time series residential water demand model, with parameters to control for variation in prices, temperature, precipitation and other factors, was used to empirically investigate the effectiveness of nonprice conservation programs in reducing water demand. We found significant reductions in use ranging between 1.1 percent and 4.0 percent per program. Because of the lack of information, we were unable to distinguish the effectiveness of individual or specific types of programs. Beyond finding that nonprice programs can be effective in reducing demand, questions regarding the efficiency and benefits to be achieved by conservation remain. As a step towards separating and evaluating the effects of individual programs, program benefits and efficiency, we recommend that utilities maintain more detailed and consistent information regarding the implementation of their nonprice programs.