Demand-Side Management of Urban Water Resources in Salt Lake City, Utah

Demand-Side Management of Urban Water Resources in Salt Lake City, Utah Eric A. Coleman, Economics Department, Utah State University This study provides an economic evaluation of the effectiveness of demand-side policies on water conservation in Salt Lake City. We use a panel database (time series of cross-sections) of water users with a municipal connection to the city and a simultaneous equations technique to estimate municipal water demand in the years 1999 to 2002. Based on the demand schedule parameters and imputed income and price elasticity measures, we then offer alternatives for conservation. There have been continued pleas in the economic literature arguing that microeconomic theory requires time series data at a disaggregated household level to accurately model consumer behavior. Therefore, the main contribution of this paper is to provide a much needed analysis of a large sample household time series database with adequate demand influence variation in a municipal water market. Second, we provide conclusions on the efficacy of Utah’s water conservation public information campaign vis-à-vis Salt Lake City. This allows local and state policymakers to better assess the tradeoffs of conservation programs