Water conservation and the common pool problem: Can pricing address free-riding in residential hot water consumption?

Arbeitspapier

Water is an increasingly scarce resource. It is often distributed such that consumers do not face any marginal cost of consumption, creating a common pool problem. For instance, tenants in multi-family buildings can often consume both hot and cold water at zero marginal cost. Using high-frequency data over many years, we analyze how the introduction of apartment-level metering and billing (IMB) affects hot water consumption. We find that introducing a marginal cost, reflecting the market price, decreases consumption drastically by 26%. Hence, price interventions can curb free-riding behavior and help the conservation of cheap but precious resources. Our results also show that heavy water users in the top consumption quartile account for 72% of the reduction. Moreover, cost-benefit calculations indicate that IMB for hot water is a cost-effective policy tool for reducing water and energy consumption.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: IFN Working Paper ; No. 1402

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Consumer Economics: Empirical Analysis ; Renewable Resources and Conservation: Demand and Supply; Prices ; Renewable Resources and Conservation: Water ; Renewable Resources and Conservation: Government Policy
• Thema: Residential water consumption ; Water conservation ; Common pool problem ; Free-riding ; Individual metering and billing

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Elinder, Mikael ; Hu, Xiao ; Liang, Che-yuan
• Ereignis: Veröffentlichung
• (wer): Research Institute of Industrial Economics (IFN)
• (wo): Stockholm
• (wann): 2021

Weitere Informationen

• Handle: http://hdl.handle.net/10419/247884
• Letzte Aktualisierung: 10.03.2025, 11:43 MEZ