The conventional wisdom (and by “conventional wisdom” I guess I mean “what Fleck thought until just now”) is that giving water users better information about their usage and the price they’re paying could be a useful water conservation tool.
Well, maybe not, according to some interesting new research by Daniel A. Brent of Pennsylvania State University and Michael Ward of Monash University. Brent and Ward ran an experiment with Yarra Valley Water, which serves greater Melbourne, to see how better informing customers about their water use and cost might change their behavior.
Melbourne, water nerds will remember, became kinda famous for its conservation behavior during the Millenium Drought. So this isn’t some water-wasting high GPCD test case like Beverly Hills or St. George. This is a place where people have been taking water conservation seriously.
Brent and Ward ran a large survey and behavioral experiment trying to understand what people already know (or thought they knew) about their water use and its cost. Then they provided the utility’s customers with actual data about their water use and cost:
Half of our sample of 30,000 single family homeowners are randomly sent a survey that asks questions about the water bill and the costs of water-use activities (e.g. the cost of taking a shower), and subsequently provides the correct information. Results show that consumers have poor information about the marginal price of water and overestimate the costs of using water. Respondents are relatively better informed about their total bill and water consumption. In aggregate, respondents increase water use in response to the survey, potentially due to learning that water is cheaper than they previously thought. Increased consumption is concentrated among low users who are more likely to over-estimate the costs of using water. (emphasis added)
Brent and Ward are presenting their findings this week at the Inaugural JEEM Conference in Environmental and Resource Economics.