What Drives Water Utility Selection of Pricing Methods? Evidence from California

Abstract Water pricing is a demand management strategy to address the looming challenge of greater water scarcity in arid regions. Much literature on residential rates focuses evaluating impact household conservation. A separate, but rarely addressed question what motivates utility select particular rate structure and timing doing so. We assess utilities’ decisions adopt pro-conservation structures, such as increasing block budget rates. develop conceptual model decision-making regarding transition apply it California. examine relationship between adoption characteristics utilities customers using logistic regression balanced panel dataset 323 California systems from 2006-2015. find notable shift towards rates, which 71% had by 2015, compared 44% 2006. Capacity factors associated with include size service population customer income level, while motivating peer adoption, engagement, special district governance. Overall, this study provides insight into barriers pricing, can inform policies enable transitions advance conservation goals.