rebate programs for water efficient appliances: are municipalities just flushing money down the...
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![Page 1: Rebate programs for water efficient appliances: Are municipalities just flushing money down the drain? Jonathan Lee Center for Environmental & Resource](https://reader030.vdocuments.site/reader030/viewer/2022032703/56649d2d5503460f94a039b8/html5/thumbnails/1.jpg)
Rebate programs for water efficient appliances: Are municipalities just flushing money
down the drain?
Jonathan Lee
Center for Environmental &Resource Economic Policy
NC State University
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Managing Municipal Water Demand
• Federal policy affecting household water demand is generally technology-based standards
• Local utilities/municipalities often are required to go further in demand management.
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Managing Municipal Water Demand
• Toolkit for household demand management:– Pricing (rarely)– Voluntary and mandatory water use
restrictions• Applies to outdoor only
– Incentive/rebate programs • Over 100 WaterSense rebate programs
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Are Rebate Programs Cost-effective Policy Tools?
• To answer this question:– What are the actual reductions in resource use?
• Engineering estimates vs. actual reductions. – Automobile fuel economy (e.g., Greene et al. 1999)– Energy efficiency (e.g., Haas et al. 1998; Schwarz and Taylor
1995)– Water Heater (Hartman, 1984)– Toilets??
– Is the technology replacement due to the program?
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High Efficiency Toilet (HET) Retrofit Rebate Program
• Town of Cary began program in June 2008
• Rebate of $150 per toilet was offered– Old toilets must use at least 3.5 gallons per
flush (gpf) – Must be replaced with WaterSense labeled HET
using 1.28 gpf
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High Efficiency Toilet (HET) Retrofit Rebate Program
• Rebates limited to three per residence
• Verification of replacement included:– Submission of original receipts– On-site inspections to verify toilets were installed
• In first year of the program, rebates were issued to 305 households that replaced 592 toilets.
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HET Program Data
1. Survey of program participants
2. Monthly water-use data 1.5 years prior up to 2 years after program participation
3. Monthly water-use of matched neighbors over same time frame.
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Survey Overview
• June 2010, 305 surveys mailed• Response rate of 80%• Information collected:
– Demographic data– House construction data– Reason old toilets were replaced
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Survey Overview
• 3 types of replacements– Full savings – rebate program was the reason
they replaced their old toilet– Small savings – rebate program was the
reason they chose an HET over a new 1.6 gpf toilet
– No savings – household planned to replace toilet with an HET anyway
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Distribution of Consumption Savings
Full Savings Small Savings No Savings0
0.05
0.1
0.15
0.2
0.25
0.3
0.35
0.4
0.45
0.5
31%
19%
44%
Perc
en
t of
Hou
seh
old
s
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Water Meter Data
• Monthly water use January 2007 to July 2010
• Covers 680 rebate recipients over two years
• Includes 25,177 matched households– Parcel is within a 0.5 mile radius of the HET
house– Parcel is same land class (e.g., single-family
resid.)– Parcel is within 0.1 acre of the HET home’s
acreage– Parcel is within 350 square feet of HET house– “Matched neighbor” is not another HET house
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Monthly Water Usage: HET vs Non-HET
Jan-
07
Apr-0
7
Jul-0
7
Oct-0
7
Jan-
08
Apr-0
8
Jul-0
8
Oct-0
8
Jan-
09
Apr-0
9
Jul-0
9
Oct-0
9
Jan-
10
Apr-1
0
Jul-1
00
1000
2000
3000
4000
5000
6000
7000
HETNon-HETProgram
Start
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How much water is saved by an HET replacement?
• Engineering estimates are simply: (GPF of old toilet – GPF of HET) * #
flushes/year
• Mean savings per HET: 4,577• Mean savings per hh: 9,057• Total (for 469 HET Toilets): 2,146,446
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Estimation Techniques• Matching – generally do not find
statistically significant differences in monthly water usage between HET households and control households prior to installation of an HET– 1 HET hh’s-2/24 months sig. pre-treatment
difference– 2 HET hh’s-13/24 months– 3 HET hh’s-0/24 months
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Estimation Techniques contd…
• Some evidence that conservation minded people may be selecting into the program– All 15 groups with significant pretreatment
differences have lower water usage for HET hh’s
• Difference-in-Differences (DID) chosen as preferred estimation technique
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How much water is saved by an HET replacement?• DID estimator:
Wi,t = a + β1D1,i + β2D2,i + β3D3,i + γtMt
+ δ1DT1,i,t + δ2DT2,i,t + δ3DT3,i,t + εi,t
• Where:– D1(2, 3) = 1 if household replaced 1 (2, 3) toilets
= 0 otherwise– Mt = monthly dummy variables
– DT1(2, 3) = 1 after household installs their 1st (2nd, 3rd) toilet
= 0 before 1st (2nd, 3rd) toilet install and after subsequent toilet installs
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DID Results
Variable
(1)No
Heterogeneity
(2)With
Heterogeneity
(3)Heterogeneity & Covariates
constant 4515.4** 4515.3** 6876.09**D 8.59DT -600.71**D1 -56.89 -127.46**D2 -1.11 -192.32**D3 350.07** 105.05DT1 -372.57** -329.76**DT2 -770.04** -669.21**DT3 -915.07** -985.48**
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DID Estimate of Water Savings (gallons/year)
• Estimated mean savings per HET: 3,950
• Estimate mean savings per hh: 7,817
• Total (for 469 HET Toilets): 1,852,632
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Comparison of DID and Engineering Estimates of Water Savings
• DID Estimated mean savings per HET: – 3,950 gallons per month– 95% confidence interval of [3,123 –
4,782]
• Engineering estimated mean savings per HET:– 4,577
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How much water savings is due to the rebate program?
• Water Savings per flush calculated for the three groups as follows:
– Full Savings: WS1 = (gpf0 – gpfHET) * #flushes/year
– Small Savings: WS2 = (1.6 – gpfHET) * #flushes/year
– No Savings: WS3 = 0
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Rebate-Induced Estimates of Water Savings (gallons per year)
• Total for 469 HET Toilets analyzed:751,506 gallons
• Estimated mean savings per HET: 1,756 gallons
• Estimate mean savings per hh: 3,400 gallons
• Estimated median savings per hh: 571 gallons
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Cost-Effectiveness
• NPV = -$89,700 + 30 year sum of benefits of the rebate program to the utility
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Cost-Effectiveness
Total (592 toilets)
Engineering Estimates
Rebate-Induced Estimates
Water Savings (gallons/year) 2,709,584 1,039,552
Annual Treatment Cost Avoided, Excluding Debt Service and Capital Cost ($2.91/1,000 gallons)
$7,885 $3,025
Net Present Value (Payback years) $89,217 (13) -$21,505 (44)
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Policy Implications
• How to improve cost-effectiveness?– Increase benefit
• Targeting full savings hh’s• Feasibility??
– Lower upfront costs• $115 HET rebate would be cost effective assuming
no behavioral responses…