Western municipal water conservation policy: The case of disaggregated demand

We investigate aspects of the felicity of both incentive‐based and command and control policies in effecting municipal water conservation goals. When demand can be disaggregated according to uses or users, our results suggest that policy efforts be focused on the submarket wherein demand is more elastic. Under plausible consumer parameters, a household production function approach to water utilization prescribes the nature of demand elasticities in alternative uses and squares nicely with empirical results from the literature. An empirical example illustrates. Overall, given data and other informational limitations, extant institutional structures, and in situ technology, our analysis suggests a predisposition for command and control policies over incentive‐based tools.