Can individual billing reduce water waste?
The right economic incentives can have a significant impact on household consumption and thus contribute to sustainable water use. Photo: Getty Images
Water is becoming an increasingly scarce resource worldwide, and the question of water management is becoming an ever more pressing issue in Sweden as well. Despite this, water is often priced in a way that can lead to overconsumption, particularly in apartment buildings where water costs are included in the rent. Without direct financial incentives to save water, consumption risks being higher than necessary.
Mikael Elinder, associate professor at the Department of Economics. Photo: Mikael Wallerstedt
– Our study examines how individual water metering and billing affect hot water usage in apartment buildings. The right economic incentives can have a significant impact on household consumption and thus contribute to sustainable water use, says Mikael Elinder, one of the researchers behind the study.
The researchers analysed data from several hundred apartments in Kumla, Sweden during the period 2012–2016. Before individual metering was introduced, all households shared a common water bill, meaning that individual savings did not result in any direct financial benefit. However, when tenants began paying for their actual consumption, hot water usage decreased by approximately 18%, demonstrating that price incentives can have a major effect on consumption.
– An interesting aspect is that while hot water consumption decreased, the distribution of costs also became fairer. Previously, those who used very little hot water paid the same as those who used large amounts, as hot water costs were included as a fixed part of the rent, says Mikael Elinder.
Immediate and long-lasting effect
The effect was immediate and long-lasting, regardless of household size, day of the week, or where in the home—whether in the bathroom or kitchen—the water was used. Compared to previous studies on water conservation, the results show that price-based incentives have a significantly greater effect than, for example, information campaigns, which often only lead to marginal savings.
– Since hot water is produced using both cold water and energy, our findings highlight that individual metering and billing can be a cost-effective strategy for reducing both water consumption and energy use. The study contributes to the ongoing debate on how economic policy instruments can be used to promote sustainable water management and resource efficiency. This is particularly important in a time of climate change and water scarcity, says Mikael Elinder.
Publication
The researchers behind the study from Uppsala University are economists Mikael Elinder and Che-Yuan Liang. The article "Mind the Tap: How Volumetric Pricing Affects Residential Hot Water Consumption" is open access and has been published in the Journal of the Association of Environmental and Resource Economists.