Maintaining the Common Pool: Voluntary Water Conservation in Response to Increasing Scarcity

Abstract

Water is a classic common pool resource, especially during drought. This paper studies the impact of changing storage levels on urban water usage in the context of a prolonged drought and an extensive public information campaign which emphasized communal responsibility for maintaining 'dam levels'.We identify a substantial voluntary conservation response to changing storage levels. The paper thus contributes a rare piece of real-world, behavioral evidence that voluntary conservation varies with the need for such action. Our findings also imply that estimates of price elasticity may be biased and welfare costs of mandatory restrictions may be overstated in many studies.

Perceptions of Water Pricing during a Drought: A Case Study from South Australia

“…Despite this, there is considerable debate around the value of regulation or market driven approaches to water conservation [3][4][5][6][7][8][9]. While economists generally stress the efficiency of pricing, environmentalists emphasis the effectiveness of regulation as a conservation measure.…”

“…The market approach implies that raising prices and moving full cost recovery on to the consumer is the most efficient conservation mechanism, as the price is the major motivator to consumption reduction. In this approach there is less reliance on maintaining water reduction either through government regulation, that may be more effective, but must be monitored, or behavioral change campaigns which must be constantly renewed [1][2][3]. However, public opposition to increases in water pricing makes the price increase strategy difficult [10], and often data on the real costs are not available [1].…”

The prestige of sustainable living: implications for water use in Australia

“…There has been much consideration on the economic drivers of water demand. Despite this, there is debate on the value of market‐driven approaches and restrictions as effective means of curtailing water demand (Aisbett and Steinhauser ; Alston and Mason ; Olmstead and Stavins ; Pumphrey et al . ).…”