Three essays exploring heterogenity in water policy preferences and responsiveness
Date
2015
Authors
Stone, Janine, author
Goemans, Christopher, advisor
Costanigro, Marco, committee member
Kroll, Stephan, committee member
Waskom, Reagan, committee member
Journal Title
Journal ISSN
Volume Title
Abstract
Water utilities throughout the western United States face increasing populations and frequent drought events that necessitate development of new water supplies, as well as use of policies that can decrease water demands. In the state of Colorado, water demand is projected to increase by roughly 50% by the year 2050; however, little is known about the types of policies households prefer to be used to meet future demand. Additionally, the extent to which varying demographic groups are more responsive than others to existing policies has not been extensively addressed in the literature.
The first paper in this dissertation examines demand-side management policies, such as price increases and watering restrictions, and evaluates households’ responses to those policies in the short and long runs. A latent-class model is used to identify households with varying behavioral responses to policies. In doing so, the model allows for an evaluation of the extent to which average responsiveness to policies like price increases is influenced by a small set of households who are more responsive to policies during the drought, and for whom responsiveness is changing over time. Accordingly, the model may be used by utilities to determine whether the welfare losses associated with decreasing water consumption are shared across households and whether households who decreased water usage in the past may be expected do so during future shortages.
The second paper shifts to an examination of household preferences for meeting future water needs. Data from two surveys--one related to water policies, and one to water policy impacts—is used in a latent-class model that explores heterogeneity in households' preferences for policies that could be used to meet future water demand in Colorado. Policies under consideration include use of supply projects, non-price conservation, price increases, and purchases of agricultural water rights. Impacts relate to changes in the marginal price of water, increases in base charges on households’ water bills, changes in landscaping, and fallowing of agricultural land. Demographic groups that support policies are compared to the groups that support associated impacts to evaluate whether the decision-making process for individuals is impacted by the type of survey used, and overall support for alternatives to agricultural water transfers are evaluated. It is found that household preferences are driven by factors such as whether one lives in a rural or urban area in the policies survey, whereas one's water usage determines support for impacts. These results suggest that the types of user groups (and potentially voting blocs) that support a policy when it is being discussed prior to implementation may differ from the groups that support policies once they see how they are actually affected.
Building, on this result, the third paper compares rankings for water policies to “inferred rankings,” or rankings obtained by calculating households' willingness to pay for impacts associated with water policies. Preferences for policies themselves may be influenced an individual's level of information, perceptions, and biases, whereas preferences deduced from impacts represent the opinions of informed consumers. Overall, it is found that households’ willingness to pay for impacts associated with decreasing the volume of agricultural water transfers is compatible with the costs of nearly all policies being considered by the state. However, the specific policy mix preferred differs across the policies and impact surveys, suggesting a polices-type survey may be preferable when examining households’ overall policy goals, whereas an impacts-type survey may be used to determine how those goals should be accomplished.
The first paper in this dissertation examines demand-side management policies, such as price increases and watering restrictions, and evaluates households’ responses to those policies in the short and long runs. A latent-class model is used to identify households with varying behavioral responses to policies. In doing so, the model allows for an evaluation of the extent to which average responsiveness to policies like price increases is influenced by a small set of households who are more responsive to policies during the drought, and for whom responsiveness is changing over time. Accordingly, the model may be used by utilities to determine whether the welfare losses associated with decreasing water consumption are shared across households and whether households who decreased water usage in the past may be expected do so during future shortages.
The second paper shifts to an examination of household preferences for meeting future water needs. Data from two surveys--one related to water policies, and one to water policy impacts—is used in a latent-class model that explores heterogeneity in households' preferences for policies that could be used to meet future water demand in Colorado. Policies under consideration include use of supply projects, non-price conservation, price increases, and purchases of agricultural water rights. Impacts relate to changes in the marginal price of water, increases in base charges on households’ water bills, changes in landscaping, and fallowing of agricultural land. Demographic groups that support policies are compared to the groups that support associated impacts to evaluate whether the decision-making process for individuals is impacted by the type of survey used, and overall support for alternatives to agricultural water transfers are evaluated. It is found that household preferences are driven by factors such as whether one lives in a rural or urban area in the policies survey, whereas one's water usage determines support for impacts. These results suggest that the types of user groups (and potentially voting blocs) that support a policy when it is being discussed prior to implementation may differ from the groups that support policies once they see how they are actually affected.
Building, on this result, the third paper compares rankings for water policies to “inferred rankings,” or rankings obtained by calculating households' willingness to pay for impacts associated with water policies. Preferences for policies themselves may be influenced an individual's level of information, perceptions, and biases, whereas preferences deduced from impacts represent the opinions of informed consumers. Overall, it is found that households’ willingness to pay for impacts associated with decreasing the volume of agricultural water transfers is compatible with the costs of nearly all policies being considered by the state. However, the specific policy mix preferred differs across the policies and impact surveys, suggesting a polices-type survey may be preferable when examining households’ overall policy goals, whereas an impacts-type survey may be used to determine how those goals should be accomplished.