Inefficient Water Pricing and Incentives for Conservation

Chakravorty, U and Dar, M H and Emerick, K (2023) Inefficient Water Pricing and Incentives for Conservation. American Economic Journal: Applied Economics, 15 (1). pp. 319-350. ISSN 1945-7790

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Abstract

Farmers often buy water using fixed fees—rather than with marginal prices. We use two randomized controlled trials in Bangladesh to study the relationship between marginal prices, adoption of a water-saving technology, and water usage. Our first experiment shows that the technology only saves water when farmers face marginal prices. Our second experiment finds that an encouragement to voluntarily convert to hourly pumping charges does not save water. Taken together, efforts to conserve water work best when farmers face marginal prices, but simply giving an option for marginal pricing is insufficient to trigger water-saving investments and reduce irrigation demands.

Item Type:	Article
Divisions:	Research Program : Asia
CRP:	UNSPECIFIED
Uncontrolled Keywords:	water-saving technology, water usage,marginal prices
Subjects:	Others > Water Resources Others > Water Conservation
Depositing User:	Mr Nagaraju T
Date Deposited:	11 Mar 2024 05:27
Last Modified:	14 Mar 2024 05:42
URI:	http://oar.icrisat.org/id/eprint/12555
Official URL:	https://www.aeaweb.org/articles?id=10.1257/app.202...
Projects:	UNSPECIFIED
Funders:	UNSPECIFIED
Acknowledgement:	UNSPECIFIED
Links:	Google Scholar

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