Water saving: Do residential consumers respond to price? A meta-analysis

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 (-0.40). However, owing to the availability of a broad dataset of studies, we single out a few policy measures and community traits that boost or depress the price elasticity of residents. If the discrete-continuous choice of consumers is modelled properly blockrate tariffs are found to push the water demand toward the realm of price responsiveness. An augmented meta-model reveals that water scarcity is also a significant driver of price elasticity. More specifically, an acute water scarcity can block the crowding-in effect of intrinsic motivations to save water.