Showing posts with label behavioral economics. Show all posts
Showing posts with label behavioral economics. Show all posts

Monday, September 13, 2010

Water Conservation & Behavioral Economics

How do you feel about water meters? I know how I feel, but I really want to know how others feel. The City of Fresno is about to flip the switch on water meters and that means people will pay based on usage not simply based on a flat rate. I want to lay out a few points that are important to me and see if they resonate with anyone else.

I was talking with a City insider about the water meters. There is concern that if the City flipped the switch and charged the market value (or cost) for water, it could put some residents in a tough financial situation. We will use an arbitrary amount for sake of discussion. We will say that one gallon of water will cost residents $1. Simple. There is one school of thought that says people should be eased into the change. Maybe the City can start by charging $0.25 for each gallon used. Then over time the rates can fall in line with the actual cost of $1/gallon. Another school of thought says to hit residents with the $1/gallon right out of the gate.

I am in favor of option #2. I use $1 of water I pay $1 for said water.

The first option is fraught with challenges. First there is the situation of repeated rate increase. People do not like those. Additionally, easing in might not result in the changed behavior we need for true conservation.

Gas approaches $4/gal and bus ridership starts to increase. Tickets for not wearing a seatbelt or for texting results in changed behavior. Use economics to change behavior.

Make people pay for water. I do not get gasoline subsidized. I pay full price for the enjoyment of driving. I should pay full price for the full green lawn.

City of Fresno, feel free to pass along the cost. If we don't want to pay out the nose, we'll change behaviors.