Consumer Demand for Green Technology in an Urban Setting: The Case of Chicago Rain Barrels

Abstract

Hydrological disruption and water pollution from urbanization can be reduced if households adopt decentralized stormwater controls. We use spatial data from Chicago’s rain barrel program to explore what factors influence adoption of durable green technology that provides public goods in an urban setting. We find that owner-occupancy is positively correlated with green-technology adoption; rental housing may have inefficiently low levels of adoption due to principal-agent problems. More rain barrels are adopted in places with a high-income ideologically-green population, but we find that rain barrel purchases are not correlated with local levels of flooding. Results indicate that policy makers might increase green-technology adoption by reducing transaction costs and providing education programs.

Keywords: consumer theory, public goods, nonpoint water pollution, stormwater management, principal-agent problem, transaction costs, rain barrels

JEL Classification: H41, Q25, Q53