Conference Agenda
Overview and details of the sessions of this conference. Please select a date or location to show only sessions at that day or location. Please select a single session for detailed view (with abstracts and downloads if available).
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Daily Overview |
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Water Management: Equity, Inequality and Ethics Location: B129 Session Chair: Lukas Mogge, RWI - Leibniz Institute for Economic Research | |
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Behavioral responses to two-part tariffs: Evidence from the introduction of volumetric water pricing 1: Indian Institute of Technology Gandhinagar, India; 2: Pennsylvania State University; 3: Georgia Institute of Technology; 4: Resources for the Future Economists often advocate for pricing mechanisms based on marginal prices to promote efficient water usage. However, consumers may find it difficult to interpret complex water pricing structures, such as nonlinear two-part tariffs that serve multiple policy objectives. In this study, we examine consumer behavior following the introduction of volumetric pricing in Sacramento, California. Our analysis reveals that volumetric pricing reduces average water consumption by 5%, although there is considerable variation among consumer groups. Low-consumption households, whose bills decreased under the new pricing structure, increased their water usage by 4% despite facing increases in marginal price. These results suggest that consumers are more responsive to changes in their total bills than to marginal prices. We interpret this finding as evidence that consumers respond to changes in total bill amounts when making consumption decisions, which has important implications for designing rate structures in systems using two-part tariffs. | |