Participation Incentives, Rebound Effects and the Cost-Effectiveness of Rebates for Water-Efficient Appliances

Rebate programs for retrofitting residential properties with water-efficient appliances have become a common conservation policy tool for local municipalities. Engineering estimates of water savings from rebate programs can be systematically biased because they assume all subsidized appliance replacements would not have occurred in the absence of the subsidy and because they fail to account for potential rebound effects. Using a unique database that combines water use data over a three-year period for all households that participated in the utility’s high efficiency toilet (HET) rebate program, water use data for a matched sample of neighbors, and a survey of rebate participants, this paper evaluates whether rebates are a cost-effective means for water utilities to promote water conservation, accounting for both selection and rebound effects.

Author(s): Lori S. Bennear, Jonathan M. Lee, and Laura O. Taylor

Published: December 2011

download: working paper (.pdf) >