Managing Water Demand: Price vs. Non-Price Conservation Programs

This paper offers an analysis of the relative merits of price and non-price approaches to water conservation. As economists, we emphasize the strong empirical evidence that using prices to manage water demand is more cost-effective than implementing non-price conservation programs. Price-based approaches also have advantages in terms of monitoring and enforcement. In terms of predictability and equity, neither policy instrument has an inherent advantage over the other. As in any policy context, political considerations are also important.

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