Low-flow appliances and household water demand: An evaluation of demand-side management policy in Albuquerque, New Mexico

• Rebate data is used to estimate the effects of low-flow appliances on water demand.
• Low-flow appliances successfully reduce household water demand.
• Certain types of appliance rebates are more cost-effectiveness than others.
• Rebate programs may be improved by reallocating rebate dollars across appliances.

Residential rebate programs for low-flow water devices have become increasingly popular as a means of reducing urban water demand. Although program specifics vary, low-flow rebates are available in most U.S. metropolitan areas, as well as in many smaller municipalities. Despite their popularity, few statistical analyses have been conducted regarding the effects of low-flow rebates on household water use. In this paper, we consider the effects of rebates from the Albuquerque Bernalillo County Water Utility Authority (ABCWUA). Using panel regression techniques with a database of rebate recipients, we estimate the marginal effects of various low-flow devices on household water demand. Results indicate a negative correlation between household water use and the presence of most low-flow devices, after controlling for water price and weather conditions. Low-flow toilets have the greatest impact on water use, while low-flow washing machines, dishwashers, showerheads, and xeriscape have smaller but significant effects. In contrast, air conditioning systems, hot water recirculators, and rain barrels have no significant impact on water use. We also test for possible rebound effects (i.e. whether low-flow appliances become less-effective over time due to poor rates of retention or behavioral changes) and compare the cost effectiveness of each rebate using levelised-costs. We find no evidence of rebound effects and substantial variation in levelised-costs, with low-flow showerheads being the most cost-effective device under the current ABCWUA rebate program. The latter result suggests that water providers can improve the efficiency of rebate programs by targeting the most cost-effective devices.