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16 Table 2.1 Chronological summary of selected price and elasticity studies Researcher Price Elasticity Notes Howe and Linaweaver (1967) -0.231 21 areas in US: Residential indoor use. -0.703 10 areas in Western US: Residential outdoor use. -1.57 11 areas in Eastern US: Residential outdoor use. Gibbs (1978) -0.51 Miami, FL: Using marginal price. -0.62 Miami, FL: Using average price. Camp (1978) -0.03 to -0.29 10 Northern MS cities: Linear equation. -0.35 to -0.40 10 Northern MS cities: Logarithmic equation. Danielson (1979) -0.27 Raleigh, NC: Using disaggregated data for total residential demand. -0.305 Raleigh, NC: Using disaggregated data for winter demand. -1.38 Raleigh, NC: Using disaggregated data for summer demand. Billings and Agthe (1980) -0.27 to -0.61 Tucson, AZ: Using two price variables and increasing block rates. Carver and Boland (1980) -0.1 Washington, DC: Short-term residential demand. Howe (1982) -0.06 21 areas in US: Residential indoor use. -0.568 10 areas in Western US: Total summer demand. -0.427 11 areas in Eastern US: Total summer demand. Planning and Management -0.2 to -0.4 National: Total residential water use, reviewed over 27 water demand studies. Consultants (1984) -0.7 to -1.6 National: Outdoor residential water use, reviewed over 5 water demand studies. -0.06 to -0.8 National: Indoor residential water use, reviewed over 5 water demand studies. Billings and Day (1989) -0.72 3 utilities around Tucson, AZ: Increasing block rate and service charges. Schneider and Whitlatch (1991) -0.262 Columbus, OH: Long-term residential. -0.119 Columbus, OH: Short-term residential. Hewitt and Hanemann (1995) -1.57 to -1.63 Denton, TX: Discrete/continuous choice model, block rate pricing of residential demand, may have been influenced by summer irrigation. Hanemann (1998) -0.01 to -1.38 National: Reviewed municipal and industrial water demand studies from 1951 to 1991. Goodman (1999) -0.7 57 US cities: Extrapolates from single-family to multi-family sector. Pint (1999) -0.04 to -0.47 Alameda County, CA: Total summer demand, steeply increasing block rates during drought. -0.07 to -1.24 Alameda County, CA: Total winter demand, steeply increasing block rates during drought. Cavanagh, Hanemann, and Stavins -1.00* 11 cities in US and Canada: Using block price structure. (2001) -0.19* 11 cities in US and Canada: Using uniform marginal price structure. * Price coefficients (measure household sensitivity to price), not elasticities.
A review of the literature unearthed a multitude of studies, each analyzing a different aspect of the relationship between water price and consumption. A review of more than 50 water demand studies concluded that the typical range for price elasticity is -0.2 to -0.4 for total residential demand, between –0.7 and –1.6 for residential outdoor demand, and between –0.06 and –0.8 for residential indoor demand (Planning and Management Consultants 1984). Overall, water demand studies in North America from 1951 to 1991 revealed a price elasticities that ranged from –0.01 to –1.38 (Hanemann 1998). The variability in elasticity estimates for residential demand was investigated by Espey, Espey, and Shaw (1997). A meta-analysis was performed on 124 elasticity estimates from 24 journal articles from 1967 to 1993. Evapotranspiration rates, rainfall, pricing structure, and season were all found to significantly affect price elasticity. Income was also found to be an important explanatory variable, although it was not found to significantly affect price elasticity in their study. Residential versus commercial demand, as well as long-run versus short-run price responsiveness, were also deemed influential. On the other hand, population density, household size, and temperature were not found to significantly affect price elasticity. Most studies have found that indoor demand is generally less elastic than outdoor demand. Because this study is concerned with multi-family housing units, where residents are rarely responsible for outdoor water use, indoor price elasticity is the most applicable. Howe and Linaweaver’s study in 1967 was the first time that residential demand was separated into the two components of indoor and outdoor use. This study was instrumental in convincing people that price does have a significant impact on water consumption. In the 1967 Howe and Linaweaver study, thirty-nine areas in the US were examined and it was found that indoor use, estimated from winter consumption, was relatively inelastic (-0.23). Outdoor demand was more elastic, especially in the humid East compared to the dry West. Howe refined the study in later years, and found an indoor elasticity of –0.06 (1982). Danielson (1979) found an indoor elasticity of –0.30. Both studies also confirmed that indoor use was less elastic than outdoor use. Indoor use is less elastic than outdoor use because indoor uses tend to be fundamental to human survival and lifestyle. There are few substitutes for indoor water, beyond bottled water for drinking, and the many essential hygienic uses contribute to its inelasticity. Outdoors, it is less imperative that a car be washed or a lawn watered, and it’s this discretionary water use that makes it more elastic. In addition, water bills represent a small portion of an overall residential 17
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NATIONAL MULTIPLE FAMILY SUBMETERIN
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CONTENTS LIST OF TABLES............
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Matched-Pair Analysis .............
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LIST OF TABLES Table ES.1.1 Breakdo
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Table 6.6 Elasticity values, analys
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Figure 4.30 RUBS water bill #6 ....
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investigated local water savings as
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We are grateful to the members of a
Page 18 and 19: quantitative aspects of separate bi
Page 20 and 21: 3. Owner/postcard survey: To identi
Page 22 and 23: "averages" of impact property water
Page 24 and 25: in-rent properties, others used the
Page 26 and 27: of these models included the billin
Page 28 and 29: 70 Average Annual Water Use Per Uni
Page 30 and 31: COSTS AND BENEFITS Beyond quantifyi
Page 32 and 33: service charge, then the resident w
Page 34 and 35: Billing Method Efficient Fixtures?
Page 36 and 37: 70 Avg. Water Use per MF Unit (kgal
Page 38 and 39: REGULATORY FRAMEWORK REVIEW The fra
Page 40 and 41: Table ES.1.12 NSUAA Summary of Stat
Page 42 and 43: above, the researchers offer the fo
Page 44 and 45: service is preferable, and would he
Page 46 and 47: practices (BMPs) should be implemen
Page 48 and 49: infrastructure of the building and
Page 50: multi-family housing. The transfer
Page 53 and 54: CHAPTER 1 INTRODU CTION More and mo
Page 55 and 56: In 1998, 15.0%, or 15.4 million, of
Page 57 and 58: TERMINOLOGY AND DEFINITIONS OF BILL
Page 59 and 60: submetering. With utility-submeteri
Page 61 and 62: all the two bedroom units for $20 p
Page 63 and 64: HOW TO USE THIS REPORT This report
Page 67: CHAPTER 2 LITERAT URE REVIEW As the
Page 71 and 72: The price elasticity of water deman
Page 73 and 74: expected. Additionally, McClelland
Page 75 and 76: submetered and five control (in-ren
Page 77 and 78: Another study might want to target
Page 81 and 82: CHAPTER 3 RESEARC H METHODS, APPROA
Page 83 and 84: 1. Selection of participating study
Page 85 and 86: STUDY SITE SELECTION The Study aime
Page 87 and 88: Figure 3.2 National Multiple Family
Page 89 and 90: Matched pair protocol/survey - conf
Page 91 and 92: information given the available bud
Page 93 and 94: survey. Service companies that prov
Page 95 and 96: in “business to business” calli
Page 97 and 98: MATCHED PAIR SAMPLE The purpose of
Page 99 and 100: The second part of the visit requir
Page 101 and 102: epresentative of a known population
Page 103 and 104: 51 Table 3.7 Postcard survey statis
Page 105 and 106: Table 3.8 Comparison of annual wate
Page 107 and 108: postcard survey. Nevertheless, exam
Page 109 and 110: confidence interval ranged from 49.
Page 111 and 112: particular property (e.g., the mont
Page 113 and 114: State PUC officials - water commiss
Page 115: 10. The PROPID number appearing on
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These costs represent the commodity
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The postcard survey provided inform
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Table 4.4 Average number of units f
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Two-thirds of the properties that r
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Percent of Surveyed Properties with
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$700 Average Rent Per Bedroom ($) $
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Percent of Surveyed Properties with
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Impact properties were also more li
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Table 4.8 Issues considered before
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Percent of Surveyed Impact Properti
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60% Percent of Surveyed Properties
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From the visits, it was found that
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100% Percent of Surveyed Residents
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Roughly similar proportions of resi
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inserts for toilets (21%) or low-fl
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proportion were unsure, 37% from su
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Table 4.18 Ownership and rental rat
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Figure 4.17 Submeter water bill #1
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wastewater rates are not shown so t
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Figure 4.23 Hot water hybrid water
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RUBS Sample Bills Seven sample RUBS
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wastewater rates are not shown so t
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Figure 4.28 RUBS water bill #4 from
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Figure 4.30 RUBS water bill #6 RUBS
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directly to and then paid by the th
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never subtracting for common area w
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Late Fees At the start of water bil
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124
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intuitively clear, and matches comm
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Indoor water use was normalized on
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Table 5.3 Summarized water use anal
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easonable assumption since there is
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Figure 5.1 shows the frequency dist
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40 Difference in Annual Water Use p
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after 1995. By including only those
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70 Average Annual Water Use Per Uni
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Table 5.11 Statistical tests compar
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Factors that Influence Water Use Th
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Table 5.12 Association of categoric
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Indoor Water Use per Unit in 2001 I
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Table 5.13 Continuous factors from
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Multivariate Models to Determine Im
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properties built before 1995 were c
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70 Average Annual Water Use Per Uni
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A = Beta coefficient for “Propert
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substantially reduces the sample si
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Table 5.17 Model #2 coefficients an
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0.00 indicating that whatever fit d
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commodity charge for water and wast
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properties having generally lower w
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110 Average Annual Water Use Per Un
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analysis, intended to control best
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Table 5.27 Paired samples test, all
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Table 5.30 Estimated water use befo
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Table 5.33 Comparison of water savi
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180
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sector only reduced usage by 18% (A
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Table 6.1 Avoided costs from submet
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submetered. Complete responses of c
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included in this cost/benefit analy
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Table 6.3 Cost and benefit for owne
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Perceived Concerns In the resident
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With a service fee, residents could
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Table 6.4 Economic return for a res
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ANALYSIS OF PRICE ELASTICITIES Econ
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concluded that if a single elastici
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esults from this analysis point to
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over which they have control than d
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According to the basic consumer cho
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The consumer choice problem can be
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210
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water systems from compliance with
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and methods of practice. NIST publi
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Table 7.1 NSUAA Summary of State Re
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New Surveys of State Agencies and W
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the AWWA WaterStats 1999 database.
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Measures, which dispatches a public
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Mississippi, Missouri, Pennsylvania
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226 Table 7.6 Summary of utility re
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DISCUSSION - KEY EXAMPLES OF STATE
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ill. Condominium associations are g
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under construction after January 1,
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Weights and Measures Regulation In
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from the submetering. Meter testing
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clean and decent housing or the lac
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240
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NATIONAL ORGANIZATIONAL STRUCTURE F
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complaints in all 50 states and app
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- Meters must demonstrate in testin
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- Plumbing systems are space constr
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(2) Twisted or kinked flex supply l
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252
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Estimated Water Use By Different Bi
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there are clear benefits to these s
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study site. These values were then
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immediately strengthens the owner's
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among the nation's key strategies f
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all repair and replacement decision
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These findings underscore the obser
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varies with volume of use) for mult
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Recommendation 6 - Efficient plumbi
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financially responsible for their o
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individual unit, the volume allocat
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RECOMMENDATIONS FOR FURTHER RESEARC
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Fixed rates - Part of a master mete
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Total-capture submetering - a type
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282
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Corral, L.R. 1997. Price and Non-Pr
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McClelland, L. 1980. Encouraging En
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Young, C.E., K.R. Kinsley and W.E.
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