Demand-Side Technology Standards Under Inefficient Pricing Regimes: Are They Effective Water Conservation Tools in the Long-Run?

Journal Article

When price-setting regulators have objectives other than maximizing social surplus, the conservation potential of demand-side technology standards can be significantly diminished. This paper demonstrates this by empirically recovering the socially sub-optimal preferences of a group of water managers in a groundwater-dependent region of California and simulating their inefficient price response to the mandated adoption of low-flow appliances by homeowners. The resulting reduction in the conservation potential of these appliances is quantified, and a modest tax is shown to be a relatively cost-effective policy tool for conservation. If non-price conservation policies are preferred according to equity criteria, the paper suggests that, in order to preserve their conservation potential, policy-makers should be required to continue to set prices as if no technology standards had been introduced.

Full Text

Duke Authors

Cited Authors

  • Timmins, C

Published Date

  • 2003

Published In

  • Environmental and Resource Economics

Volume / Issue

  • 26 / 1

Start / End Page

  • 107 - 124

Digital Object Identifier (DOI)

  • 10.1023/A:1025689706396