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

Resources for the Future Discussion Paper 16-10

51 Pages Posted: 3 Jun 2016

See all articles by Casey Wichman

Casey Wichman

Resources for the Future

Laura O. Taylor

North Carolina State University

Roger H. von Haefen

North Carolina State University - Department of Agricultural & Resource Economics

Date Written: March 16, 2016

Abstract

The efficiency properties of price and nonprice instruments for conservation in environmental policy are well understood. However, 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 data to examine heterogeneous responses to both price and nonprice conservation policies during times of drought while controlling for unobservable household characteristics. Our empirical models suggest that among owners of detached, single-family homes in six North Carolina municipalities, relatively low-income households are more sensitive to price and relatively high-consumption households are less sensitive to price. However, prescriptive policies such as restrictions on outdoor water use result in uniform responses across income levels, while simultaneously targeting reductions from households with irrigation systems and historically high consumption.

Keywords: Water Demand, Nonprice Policies, Price Regulation, Conservation, Drought

JEL Classification: Q25, D12, H42, L51, L95

Suggested Citation

Wichman, Casey and Taylor, Laura O. and von Haefen, Roger H., Conservation Policies: Who Responds to Price and Who Responds to Prescription? (March 16, 2016). Resources for the Future Discussion Paper 16-10, Available at SSRN: https://ssrn.com/abstract=2789765 or http://dx.doi.org/10.2139/ssrn.2789765

Casey Wichman (Contact Author)

Resources for the Future ( email )

1616 P Street, NW
Washington, DC 20036
United States
2023285055 (Phone)

HOME PAGE: http://www.rff.org/wichman

Laura O. Taylor

North Carolina State University ( email )

Box 8109
3332 Nelson Hall
Raleigh, NC 27695-8109
United States

Roger H. Von Haefen

North Carolina State University - Department of Agricultural & Resource Economics ( email )

Box 8109
3332 Nelson Hall
Raleigh, NC 27695-8109
United States
(919) 515-8946 (Phone)
(919) 515-1824 (Fax)

HOME PAGE: http://www.ag-econ.ncsu.edu/faculty/vonHaefen/vita.pdf

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