Adoption and Efficacy of Tiered Water Pricing: Evidence From Utah

Drought conditions and a rising population in Utah have created significant demand for urban water conservation. Senate Bill 28 (SB28) passed in 2016 by the Utah State Legislature reflects an effort put forth by the state to address urban culinary water consumption by requiring an increasing block rate pricing structure for retail culinary water providers in Utah. Recent and historical literature suggest that tiered water prices, though potentially more effective than non-price tools, need to be aggressive to achieve conservation. In this paper, I aim to understand the adoption of tiered pricing in Utah, it’s role in conserving water, and whether adoption of tiered pricing influences urban water consumption. I use econometric tools to observe the change in residential water consumption before and after a municipality adopts a tiered water pricing structure. My results suggest that adoption of tiered pricing has little to no effect on residential culinary water consumption and I consequently make recommendations for policy improvements.