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The effects of the universal metering programme on water consumption, welfare and equity

The effects of the universal metering programme on water consumption, welfare and equity
The effects of the universal metering programme on water consumption, welfare and equity
There is consensus that meters are necessary for promoting an efficient use of water. However, available evidence on benefits and costs of metering is scant and often based on small samples. We use data of the first large-scale compulsory metering programme in England to study its impact on consumption, social efficiency and distributional outcomes. We find a decrease in consumption of 22% after meter installation, a considerably higher value than assumed as policy target. This result implies that overall, the benefits of metering outweigh its costs. We also document a large heterogeneity in reaction, with many households showing low sensitivity to the new tariff. This novel finding suggests that selective metering, where only more price-sensitive households receive meters, would deliver even higher social welfare. Looking at distributional effects, we find similar reduction in consumption across income groups, although only high-income households gain financially from the new tariff.
WATER BUDGET, metering, social efficiency, equity
0030-7653
1-24
Ornaghi, Carmine
33275e47-4642-4023-a195-39c91d0146b0
Tonin, Mirco
bd4b5fbe-5992-44cb-a702-9c768fdf9bc0
Ornaghi, Carmine
33275e47-4642-4023-a195-39c91d0146b0
Tonin, Mirco
bd4b5fbe-5992-44cb-a702-9c768fdf9bc0

Ornaghi, Carmine and Tonin, Mirco (2019) The effects of the universal metering programme on water consumption, welfare and equity. Oxford Economic Papers, 1-24, [gpz068]. (doi:10.1093/oep/gpz068).

Record type: Article

Abstract

There is consensus that meters are necessary for promoting an efficient use of water. However, available evidence on benefits and costs of metering is scant and often based on small samples. We use data of the first large-scale compulsory metering programme in England to study its impact on consumption, social efficiency and distributional outcomes. We find a decrease in consumption of 22% after meter installation, a considerably higher value than assumed as policy target. This result implies that overall, the benefits of metering outweigh its costs. We also document a large heterogeneity in reaction, with many households showing low sensitivity to the new tariff. This novel finding suggests that selective metering, where only more price-sensitive households receive meters, would deliver even higher social welfare. Looking at distributional effects, we find similar reduction in consumption across income groups, although only high-income households gain financially from the new tariff.

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Accepted/In Press date: 9 October 2019
e-pub ahead of print date: 11 November 2019
Keywords: WATER BUDGET, metering, social efficiency, equity

Identifiers

Local EPrints ID: 435158
URI: http://eprints.soton.ac.uk/id/eprint/435158
ISSN: 0030-7653
PURE UUID: 29403c9c-be01-46db-a0e1-bb42907dd49d
ORCID for Carmine Ornaghi: ORCID iD orcid.org/0000-0003-2704-2537

Catalogue record

Date deposited: 24 Oct 2019 16:30
Last modified: 15 May 2020 00:33

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