The Persistence and Heterogeneity of Economic and Environmental Effects from Improved Household Water Efficiency in an Arid Environment

Abstract

One widely promoted solution to water scarcity is the adoption of water-efficient technologies, which are believed to benefit both the environment and the adopters. Here, in a pre-registered study, we quantify the long-term environmental and economic effects of such technologies in an arid region of Central America where policymakers sought to conserve groundwater by offering free installation of water-efficient technologies. Using data from a randomized controlled trial and behavioral economic modelling, we estimate the persistence and heterogeneity of impacts over an eight-year period. Although adoption of the technologies led to short-term reductions in monthly water use, it may have increased use in years five through eight. Although small reductions in later years cannot be statistically ruled out, we reject the null hypothesis that the average monthly effects remained constant over time in favor of the alternative that the effects waned (p<0.01). Survey data suggest that the effects waned because of widespread disadoption of the technologies and their subsequent replacement by status quo technologies or unimpeded open pipes. In the economic analysis, the expected net present value from purchasing and installing the technologies was negative for the average household. We find weak evidence that wealthier households benefited more than poorer households but no evidence of spatially heterogeneous effects across the study communities. Although resource-efficient technologies are widely promoted as important solutions to sustainability problems (e.g., energy efficient technologies), our results highlight that much remains to be understood about their longer-term effects and how those effects vary across people and the targeted resources.