As the Western United States faces its worst mega-drought in more than a millennium and the largest reservoirs quickly deplete, there is an urgent need for local leaders to identify effective ways to conserve water in their communities. Fortunately, “smart meters” are easy to deploy and often already in place to measure a household’s water usage. A new study that followed the roll-out of a pilot policy using smart meter data to enforce water restrictions in one California city found the policy did succeed in reducing water use—but perhaps too well.

“Smart technologies offer local leaders immense opportunities to achieve better compliance with everything from pollution rules to water conservation and more. We found that using smart meters is easy to implement, they’re able to detect almost all water use violations, and they can be the go-to solution for local governments that don’t have the resources or manpower for source-to-source inspections,” says co-author Michael Greenstone, the Milton Friedman Distinguished Service Professor in Economics at the University of Chicago. “The urgency of the water challenge in the west requires such highly efficient tools. However, as policymakers introduce new technologies, they will need to carefully balance improved monitoring with community expectations and enforcement efforts.”

Greenstone and his colleagues at the University of Chicago Energy & Environment Lab worked with city officials to help implement the program. The city already had the smart meters in place, but was not actively using them. Instead, officials were still detecting violators manually through in-person inspections – employing “water cops” who drove around looking for lawns being watered at prohibited times. The researchers implemented a field experiment that aimed to test whether smart meters could do a better, more efficient job of catching violators and whether improved enforcement of the water use restrictions led to a reduction in water use. The experiment varied the probability and the magnitude of fines imposed for water use violations throughout the city.

After using the smart meter data to identify violations during the summer months, the share of households fined for non-compliance increased from 0.1 percent under the previous system to 14 percent under the system using the smart meter data. When households noticed that they were now getting caught and fined, they were more likely to comply with the water rules, leading to a 17 percent drop in violations and a 3 percent decline in water use over the summer months. Households continued to conserve even after the pilot ended.

“The fact that households continued conserving water even after the summer, and even after the policy—and fines—ended, demonstrates that the policy was nudging behavioral changes in some households,” says Ludovica Gazze, an assistant professor at the University of Warwick.

Had the policy been scaled and had the water savings measured in the months after the experiment persisted at the same levels, then the scaled-up policy would have saved the city 394 million gallons of water annually. Such water savings from this city would have achieved 20 percent of the reductions that Governor Gavin Newsom encouraged from California residents.

But the policy did not last. While some residents changed their habits, many others complained. During the three-month pilot policy when many more fines were issued, there was a 1,102 percent increase in customer complaints. The political dissatisfaction from community members ultimately led city officials to end the program.

“Giving up on using these smart technologies simply because they are too good at what they do is not the solution,” says Olga Rostapshova, executive director of the Energy & Environment Lab. “Policymakers should find ways to use this type of real-time data and bring their aging regulations into this century. Doing so may require a gradual shift and careful calibration of community expectations. We hope to partner with more cities to test out different approaches to find the right balance.”

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E&E Lab
E&E Lab
The Energy & Environment Lab partners with civic and community leaders to identify, rigorously evaluate, and help scale programs and policies to improve the environment and ensure access to reliable...