TY  - JOUR
AU  - Olmstead,Sheila M.
AU  - Stavins,Robert N.
TI  - Comparing Price and Non-Price Approaches to Urban Water Conservation
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 14147
PY  - 2008
Y2  - June 2008
UR  - http://www.nber.org/papers/w14147
L1  - http://www.nber.org/papers/w14147.pdf
N1  - Author contact info:
Sheila Olmstead
Resources for the Future
1616 P Street, NW
Washington, DC  20036
Tel: 202-328-5163
E-Mail: olmstead@rff.org

Robert Stavins
JFK School of Government
Harvard University
79 JFK Street
Cambridge, MA 02138
Tel: 617/495-1820
Fax: 617/496-3783
E-Mail: robert_stavins@harvard.edu
AB  - Urban water conservation is typically achieved through prescriptive regulations, including the rationing of water for particular uses and requirements for the installation of particular technologies.  A significant shift has occurred in pollution control regulations toward market-based policies in recent decades.  We offer an analysis of the relative merits of market-based and prescriptive approaches to water conservation, where prices have rarely been used to allocate scarce supplies.  The analysis emphasizes the emerging theoretical and empirical evidence that using prices to manage water demand is more cost-effective than implementing non-price conservation programs, similar to results for pollution control in earlier decades.  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 important.
ER  -