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Residential Water Consumption and the Free-Rider Problem: Economic Incentives as Consumption Controls in Multi-Family Homes
Uppsala University, Disciplinary Domain of Humanities and Social Sciences, Faculty of Social Sciences, Department of Economics.
2018 (English)Independent thesis Advanced level (degree of Master (Two Years)), 20 credits / 30 HE creditsStudent thesis
Abstract [en]

Water related concerns continue to garner more attention as both climatic uncertainty and population expansion strain the availability of a resource that is a fundamental need for human societies. Estimates done by the OECD are that 1 in 10 people worldwide lack access to safe water, and that the necessary investments in water infrastructure are significantly higher than those for other basic resources such as electricity. Furthermore, their reports project that between 2000 and 2050 water demand will increase by 55 percent, driven in no small part by a 130 percent increase in domestic usage (OECD, 2016). The continued disparity between supply and demand for water resources has driven the literature on water security, which was for some time dominated by commercial and agricultural concerns, into investigating the nature of residential water demand and policies managing it. Universally low estimates for water price elasticity in homes indicates that designing and implementing policies for consumption management, aiming to reach both fiscal and environmental goals, is a challenging endeavor and a setting that would greatly benefit from further investigation. Instituting individual monitoring and debiting (IMD) for resource use is foundational for any price based incentive system to be effective; whether the aims of the policies are fiscal or conservational in nature, the ability for free riding under non-monitored regimes has negative impacts. With this in mind, this survey investigates the impacts of the implementation of the billing policy shift, that comes along with IMD regimes, on residential water usage across a set of multi-family homes in Kumla, Sweden. In doing so we have found a significant decrease in overall water usage of over 20 percent and, through a characterization of the behavioral reaction, a significant convergence in consumption behavior, entailing a reduction in water usage among the households with the highest usage rates. The characterization of the dynamics of the treatment effect provides valuable insights into the dynamics of the impact of IMD application, allowing for more a nuanced understanding of the ramifications of its use in real world settings.

Place, publisher, year, edition, pages
2018.
National Category
Economics
Identifiers
URN: urn:nbn:se:uu:diva-356946OAI: oai:DiVA.org:uu-356946DiVA, id: diva2:1237534
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Available from: 2018-08-09 Created: 2018-08-09 Last updated: 2018-08-09Bibliographically approved

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CiteExportLink to record
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Cite
Citation style
  • apa
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
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Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
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  • asciidoc
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