Urban water demand management is key to water supply sustainability in high-density, water-stressed areas throughout the world, and emerging technologies could transform it. In particular, smart metering could allow for conserving water by dynamically changing prices to reflect water scarcity and supply cost variability. Yet, little is known on end-users’ reaction to short-term price changes, an essential determinant of the effectiveness and acceptability of dynamic water pricing. This paper reports on the design and results of an online experiment that measures end-users’ water consumption decisions when confronted with time-varying prices, and investigates the interaction between pricing and water scarcity awareness. We design a series of treatments where players must indicate their shower length given different water prices, price variations, and scarcity scenarios. Beyond corroborating the theory that higher prices lower usage, the experiment finds evidence of a dynamic pricing effect: users respond more strongly to a given price if they have been exposed to a lower price before. This suggests short-term residential price increases could be effective at boosting water conservation.

Response of residential water demand to dynamic pricing: Evidence from an online experiment / Marzano, Riccardo; Rougé, Charles; Garrone, PAOLA MARIA OLGA; Harou, Julien J.; Pulido-Velazquez, Manuel. - In: WATER RESOURCES & ECONOMICS. - ISSN 2212-4284. - 32:(2020). [10.1016/j.wre.2020.100169]

Response of residential water demand to dynamic pricing: Evidence from an online experiment

Riccardo Marzano
Primo
;
Paola Garrone;
2020

Abstract

Urban water demand management is key to water supply sustainability in high-density, water-stressed areas throughout the world, and emerging technologies could transform it. In particular, smart metering could allow for conserving water by dynamically changing prices to reflect water scarcity and supply cost variability. Yet, little is known on end-users’ reaction to short-term price changes, an essential determinant of the effectiveness and acceptability of dynamic water pricing. This paper reports on the design and results of an online experiment that measures end-users’ water consumption decisions when confronted with time-varying prices, and investigates the interaction between pricing and water scarcity awareness. We design a series of treatments where players must indicate their shower length given different water prices, price variations, and scarcity scenarios. Beyond corroborating the theory that higher prices lower usage, the experiment finds evidence of a dynamic pricing effect: users respond more strongly to a given price if they have been exposed to a lower price before. This suggests short-term residential price increases could be effective at boosting water conservation.
2020
Dynamic pricing; Urban water; Online experiment; Water scarcity
01 Pubblicazione su rivista::01a Articolo in rivista
Response of residential water demand to dynamic pricing: Evidence from an online experiment / Marzano, Riccardo; Rougé, Charles; Garrone, PAOLA MARIA OLGA; Harou, Julien J.; Pulido-Velazquez, Manuel. - In: WATER RESOURCES & ECONOMICS. - ISSN 2212-4284. - 32:(2020). [10.1016/j.wre.2020.100169]
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11573/1508306
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