The impact of real-time quantity information on residential water demand

Real-time information, through smart metering, has become an increasingly popular method to promote conservation. It is often the case that water is priced according to “penalty,” or increasing block rate, pricing structures and payment occurs after consumption has already taken place. The question addressed here is: how does providing consumers real time information impact water consumption behavior for households? We make use of a unique water consumption data combined with the discrete/continuous choice model to better understand the role of information in non-linear pricing systems together with a program that allows households real-time information about consumption. Our results suggest that the combination of increasing block rates together with real-time information increases water consumption but makes households more price sensitive.