Assessing the impact of price and non-price policies on residential water demand: a case study in Wisconsin

This paper reports an investigation of the impact of price policies (PP) and non-price policies (NPP) on residential water demand. Using a sample of US water utilities located in Wisconsin, residential water demand was estimated by taking into account the fact that some of the characteristics of local communities that determine PP and NPP choices may also influence residential water consumption levels. It is first shown that neglecting endogeneity of PP or NPP may lead to biased parameter estimates. Second, it is demonstrated that the policy mix (PP or NPP) may be as important as the level of prices for determining water consumption. Lastly, evidence is provided that dissemination efforts made by local communities to promote NPP drive the effectiveness of those policies.