Tariff familiarity sustains household water conservation

Due to rapid urbanization and income growth, residential water consumption worldwide is increasing much faster than in other sectors. This exponential growth in demand threatens freshwater resources, and policymakers across the globe are attempting to curb usage by redesigning tariff structures and implementing price hikes. Using a unique seven-year dataset of daily household water usage from multiple counties in China, we show that tariff reforms that simultaneously change both structure and price yield only short-lived conservation effects, as usage rebounds within months. Instead, our empirical results confirm that staggered tariff reforms-introducing price hikes only after households have adapted to a new structure-can reduce water consumption. Policy simulations suggest that a staggered reform approach could achieve an additional 4-percentage-point reduction in water usage. These findings provide new evidence on how tariff design shapes consumption behaviour and offer actionable, evidence-based insights for policymakers seeking to design effective, equitable, and sustainable water management strategies.