Nudges for Economics of Water Tariffs – NEWTS

The project aims to provide a socio-economic assessment of green nudging policies, focusing on water consumption controlling and/or proper understanding by the households of the charging system, taking into account adjustments in pricing policy that nudges, by their effects on water demand functions, may generate. From an operational point of view, it consists in developing a microsimulation model, based on econometric estimates of household water demand, to assess socio-economic returns of mix policies, combining nudges and pricing instruments, and identify financially sustainable DSM policies that improve existing pricing of water.

The effects of nudges on household water consumptions are examined through the realization of controlled experiments, in laboratory and in the field. Controlled field experiments are deployed on a large scale in Gijon (Spain), Saint Paul (Reunion Island - France) and Sfax (Tunisia). Econometric estimation of residential water demand is carried out to measure basic needs of the households, price-sensitivity of demand and perceived prices of water, and to infer the effects of behavioural interventions on these factors. Using a broad set of appropriate indicators to measure affordability, incentive efficiency and distributional effects, cost-benefit analysis are conducted to infer the effects of nudges on the socio-economic performance of the existing pricing system (that may be improved) and propose optimal policies, according to well-defined decision criteria for local public decision-makers, in various frameworks. These methodologies articulate to construct a decision support model that will be posted on line, with an evaluation software package on a web platform.