Consumer welfare consequences of the California drought conservation mandate

Steven Buck; Mehdi Nemati; David Sunding

doi:10.1002/aepp.13213

Consumer welfare consequences of the California drought conservation mandate

Steven Buck, Mehdi Nemati, David Sunding

Research output: Contribution to journal › Article › peer-review

6 Scopus citations

Abstract

We measure consumer welfare losses from reductions in water use following California's conservation mandate in 2015, which imposed utility service area-specific conservation targets of 4% up to 36%. We document imperfect compliance with the mandate and discuss factors that may explain the pattern of reductions ultimately observed. The basis for calculating welfare losses is an econometric model of residential water demand that yields local demands with elasticities ranging from −0.56 to −0.10. In terms of economic efficiency, we estimate a 20% gain in consumer welfare under the efficient allocation of conservation reductions relative to the observed pattern of reductions.

Original language	English
Pages (from-to)	510-533
Number of pages	24
Journal	Applied Economic Perspectives and Policy
Volume	45
Issue number	1
DOIs	https://doi.org/10.1002/aepp.13213
State	Published - Mar 2023

Bibliographical note

Publisher Copyright:
© 2021 Agricultural & Applied Economics Association.

Funding

This work was supported by the USDA National Institute of Food and Agriculture, Multi‐State Hatch Project #1022231 (W‐4190). 1

Funders	Funder number
US Department of Agriculture National Institute of Food and Agriculture, Agriculture and Food Research Initiative	W‐4190, 1022231

Keywords

California
conservation mandate
drought
residential water
welfare analysis

ASJC Scopus subject areas

Development
Economics and Econometrics

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10.1002/aepp.13213

Cite this

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title = "Consumer welfare consequences of the California drought conservation mandate",

abstract = "We measure consumer welfare losses from reductions in water use following California's conservation mandate in 2015, which imposed utility service area-specific conservation targets of 4\% up to 36\%. We document imperfect compliance with the mandate and discuss factors that may explain the pattern of reductions ultimately observed. The basis for calculating welfare losses is an econometric model of residential water demand that yields local demands with elasticities ranging from −0.56 to −0.10. In terms of economic efficiency, we estimate a 20\% gain in consumer welfare under the efficient allocation of conservation reductions relative to the observed pattern of reductions.",

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Consumer welfare consequences of the California drought conservation mandate

Abstract

Bibliographical note

Funding

Keywords

ASJC Scopus subject areas

Access to Document

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