Do Conservation Policies Work? Evidence from Residential Water Use

In response to the historic 2011–17 California drought, local governments enacted a raft of conservation policies, and little is known about which ones explain sharp decline in residential water consumption. To answer this question, we use novel data set hourly consumption for more than 82,300 households Fresno, California, where declined by nearly third, have three main findings. First, estimate price elasticity demand be 0.16 marginal rates 0.39 average rates. Second, reducing number days outdoor watering allowable from 3 2 substantially decreases use, despite availability opportunities substitute between permitted nonpermitted hours, days, seasons. Third, “bully pulpit” pronouncements crisis increased public awareness drought conditions but did not contribute savings. Overall, higher prices 40%–44% changes observed during our sample period reductions when 45%–51% these changes. However, absence experimental or quasi-experimental variation policies means that interpret associational evidence cautiously.