Ever wondered why water saving behaviours drop off after households install water saving devices or technologies? Or whether saving money is the only driver for a family deciding to cut its water bill?

These two fascinating questions are the subject of new CRCWSC research into behavioural economics, and we’ve just released an industry note about each to help translate the research into action.

Behavioural rebound effect

The first question comes down to what’s known as the behavioural rebound effect. Basic economic theory predicts people will reduce their water saving behaviours after installing a more water efficient technology because the new device means every minute of shower time is now cheaper—the user thinks it’s okay to shower for longer. This is the rebound effect, which until now in economics has been thought to be entirely financially motivated. But our new research points to a behavioural rebound effect, which says it’s not only money, but other factors such as a sense of environmental responsibility and the related concept of ‘moral licensing’, at play in water saving behaviour choices.

So, what does this mean?

The research brings good news and bad news. The bad news is, making it easier to save water (on purely environmental and not financial or other grounds) does not, on average, boost water saving behaviours. If you make it easier to save water, individuals will probably not improve water saving behaviours and instead will use their extra time and energy on other things.

The good news is, the research showed that the rebound effect is driven by more than just money—environmental care and social norms are at play here too. There is much ongoing research into how to nudge people into more water saving and environmentally friendly behaviours, and this research could provide insights into how to offset the behavioural rebound effect. Indeed, the reductions in water use around Australia during and after the Millennium Drought or due to significant price increases have been shown to far exceed the impact of these rebound effects.

The bottom line is: When predicting the water savings that can be achieved from a new technology, we need to account for a possible rebound effect that lowers the amount of water saved due to the new technology.

We need to think more deeply about the balance between investing in water efficient technologies and encouraging water sensitive behaviours.

Social norms

Another related area of research is using social norms as incentives for demand management. Understanding social norms can help identify valuable opportunities to target and tailor conservation programs and drive more effective policy development and outcomes.

Both internal and external motivations guide people’s decisions about their water use. Households conserve energy and water to reduce their bills. But conserving water and energy may also increase their sense of self-worth, which is associated with conservation. These different motivations open up policies beyond traditional economic incentives, such as prices and subsidies, to tap into social or moral motivations to reduce resource consumption.

We start to see that social norms are an important aspect of designing water efficiency programs and effective policy development.

Want to know more?

You can read more about both angles of the new behavioural economics research in the newly released industry notes:

The behavioural rebound effect: What is it and why does it matter?

Using social norms as incentives for demand management

Last updated: 22nd Oct 2019