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Conservation Policies: Who Responds to Price and Who Responds to Prescription?

Author

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  • Casey J. Wichman
  • Laura O. Taylor
  • Roger H. von Haefen
Abstract
The efficiency properties of price and non-price instruments for conservation in environmental policy are well understood. Yet, there is little evidence comparing the effectiveness of these instruments, especially when considering water resource management. We exploit a rich panel of residential water consumption to examine heterogeneous responses to both price and non-price conservation policies during times of drought while controlling for unobservable household characteristics. Our empirical models suggest that the burden of pricing policies fall disproportionately on low-income households and fail to reduce consumption among households who generally are large consumers of water. However, prescriptive policies such as restrictions on outdoor water use result in uniform responses across income classes while simultaneously targeting reductions from households with irrigation systems or historically high consumption.

Suggested Citation

  • Casey J. Wichman & Laura O. Taylor & Roger H. von Haefen, 2014. "Conservation Policies: Who Responds to Price and Who Responds to Prescription?," NBER Working Papers 20466, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:20466
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    More about this item

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L95 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Gas Utilities; Pipelines; Water Utilities
    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water

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