Economics ETDs

Publication Date

Spring 4-14-2018

Abstract

Scarce water resources in the Western United States, in concert with population growth and climate change, constitute a need to better understand factors that impact water demand. In this dissertation, Chapter 1 provides cultural and historical context for water use in the West and argues that understanding water demand is important, especially when managing scarcity is a goal. Chapter 2 uses aggregate city-level data from four municipalities in New Mexico to investigate seasonal trends and breakpoints. Although per premises and aggregate demand tend to decline in all geographies investigated, existence and timing of breakpoints varies by geography. Additionally, drivers of declining trends are difficult to quantify but are likely related to price increases, uptake of water saving technology, the generally soft economic environment, and increased interest in water conservation.

Chapter 3 models water demand for the city of Clovis, New Mexico using administrative premises-level monthly data. Water use declines are associated with utility-controlled action such as price increases and rebates for landscaping changes and water saving technologies. Water demand was found to be price inelastic and in the neighborhood of -0.50. However, low-volume users were more sensitive to price than the high-volume users. Similarly, low-volume users were more income elastic than high volume users. Additionally, premises receiving water-saving toilet and washing machine rebates were more price inelastic than premises receiving landscaping rebates, perhaps implying that the most effective means of reducing water use for toilet and washing machine rebate-receiving premises is through the installation of new technology rather than price response. Finally, toilet rebates were found to be the most cost effective rebate type per volume of water saved.

Chapter 4 employs an optimal control framework to investigate utility-level fiscal impacts of demand management, such as rebated technology. Given that water-saving technologies reduce water demand, and apparently negatively impact the utility’s revenues and costs, it is not immediately clear what benefit this activity provides. Outlined are optimal paths illustrating tradeoffs between infrastructure investment, repair, and advertising. A testable econometric model is also developed.

Chapter 5 concludes the dissertation by summarizing major findings and discussing limitations and future work.

Degree Name

Economics

Level of Degree

Doctoral

Department Name

Department of Economics

First Committee Member (Chair)

Robert P. Berrens

Second Committee Member

Janie Chermak

Third Committee Member

Jingjing Wang

Fourth Committee Member

Caroline Scruggs

Keywords

water demand, price elasticity, water rebates, break point analysis, optimal control

Document Type

Dissertation

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