Impact of Heterogeneous Consumer Response on Water Conservation Goals

摘要

The goals of this research were to (1) identify statistically significant,observable characteristics that are factors of demand for water; (2) econometrically model water demand incorporating these characteristics into the model, which allows the authors to segment consumer groups, and (3) design a conservation incentive program that allows individuals to choose their own best conservation alternative while, in aggregate, achieving the conservation program goals. The authors employed an experimental game that simulates water consumption from a potentially exhaustible source. Experiment participants included University of New Mexico students and members of communities in New Mexico. The authors found heterogeneous demand for water, including differences between student and community participants and between those who are employed and those who are retired. Consumption is a function of a variety of social and cultural factors including age, gender, ethnicity, political affiliation, religious affiliation, and risk preferences. Policy based on demand estimates that assume homogeneous consumers is not efficient. By disaggregating demand, the authors show that a menu of price systems can achieve conservation goals with less loss of consumer welfare than can alternative policies. These systems provide each consumer an incentive to choose the one most beneficial for his or her unique demand, minimizing enforcement costs.