An Economic Assessment of the Impacts of Outdoor Water Use Restrictions in South Florida

Population growth and climate change are important factors determining residential water demand. Most residential water consumption can be attributed to outdoor use. To reduce water consumption, outdoor water use restrictions (OWRs) have become a popular policy tool in the last decades. We developed an integrated framework consisting of a Difference in Differences (DID) analysis, Value Function approach and Discrete Choice Model to perform an economic assessment of the impacts of OWRs in South Florida. The results reveal a decreasing effect of up to 133 gallons per person per month due to the strictest OWR, equaling a yearly value of almost US$42.2 million for South Florida residents. To link with the regional hydrological system, we estimate that the implementation of this OWR could be related to a 0.9 million acre-feet drop in Lake Okeechobee. The findings deliver beneficial information for policy decisions regarding the economic and societal implications of OWRs