Oliver Browne, UChicago

Abstract:
In response to the ongoing drought in California, utilities have instituted a variety of policies in a bid to reduce residential water use. These policies include tightening outdoor watering restrictions, rate changes, rebate programs for water efficient appliances and a variety of other municipal and state campaigns and announcements concerning the drought and water use targets. We attempt to estimate the impact of these different policies and behavioral responses to the awareness campaigns using microdata on residential water use from a large utility in California. These policies appear to have had a large aggregate impact on residential water use, with average daily use falling by 28% between 2013 and 2015. We find that tightened restrictions on outdoor water use cause a large reduction in water applied outdoors. Although there is some substitution across days of the week, there is a net reduction due to both savings among households who initially comply with the regulation, and through an increase in compliance. We find suggestive evidence of an impact of rate changes on household water use, however our results are not well identified. Although installation of efficient appliances (in particular toilets) lead to significant reductions in water use, penetration of rebates was too small to have a large overall impact. We also find suggestive evidence that households respond to public announcements concerning the drought and water use targets, although it is unclear how permanent these effects are.