Price Elasticity of Residential Water Demand and Water Scarcity

Paper presented at WINIR Conference, 2-4 September 2016, Boston, MA, The United States, with the title: "Water Saving: Do Residential Consumers Respond to Price? The Role of Informal Institutions"

Posted: 30 Jan 2018

See all articles by Riccardo Marzano

Riccardo Marzano

Politecnico di Milano

Paola Garrone

Politecnico di Milano

Luca Grilli

Polytechnic University of Milan - Department of Management, Economics and Industrial Engineering

Date Written: January 2016

Abstract

The effectiveness of price as a water conservation measure remains an open empirical issue and relevant policy question. We conduct a meta-regression analysis that summarizes 615 estimates of the price elasticity of residential water demand, from 124 econometric studies. Large-sample studies have recently converged on the central result of previous meta-analyses, namely the low value of average price elasticity. However, owing to the availability of a broad dataset of studies, we single out location and community traits that boost or depress the price elasticity of residents. Our results reveal that water scarcity is a significant driver of price elasticity. More specifically, if water scarcity is harsh, residents' intrinsic motivations to save water crowd-out price measures.

Keywords: price elasticity, water demand, meta-analysis, water scarcity, environmental attitudes

JEL Classification: Q21, Q25, Q50, Q57

Suggested Citation

Marzano, Riccardo and Garrone, Paola and Grilli, Luca, Price Elasticity of Residential Water Demand and Water Scarcity (January 2016). Paper presented at WINIR Conference, 2-4 September 2016, Boston, MA, The United States, with the title: "Water Saving: Do Residential Consumers Respond to Price? The Role of Informal Institutions". Available at SSRN: https://ssrn.com/abstract=3106190 or http://dx.doi.org/10.2139/ssrn.3106190

Riccardo Marzano (Contact Author)

Politecnico di Milano ( email )

Via Lambruschini 4/b
MIlano, MI 20156
Italy

Paola Garrone

Politecnico di Milano ( email )

piazza Leonardo da Vinci 32
Milano, 20133
Italy
+39-02-23992742 (Phone)

Luca Grilli

Polytechnic University of Milan - Department of Management, Economics and Industrial Engineering ( email )

Via Lambruschini 4C - building 26/A
Milano, 20156
Italy

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