| This dissertation focuses on one aspect of the environmental issues associated with suburbanization: the demand for outdoor water use. It develops and estimates a model of demand for water with household level monthly data from Ipswich, Massachusetts. The proposed approach to modeling outdoor water demand under the household production approach contributes to the literature by taking into account complex weather interactions, property characteristics and the potential for interdependent preferences.;The price responsiveness varies between households connected and unconnected to the sewer. The arc elasticity of demand calculated from the estimated coefficients from the discrete specification is -0.11 for households connected to the public sewer system, and is -0.092 for households unconnected to the public sewer system. The implication is that the water utility can raise prices during summer without affecting the total revenue it collects from the customers.;This study finds that a neighborhood effect weakens during quantitative restrictions for almost all parcels. This implies that most households respond as expected to quantitative restrictions policies of the town and do not respond to the water usage by their neighbors. Households in very large parcels (over 2.24 acres) exhibit a different behavior, irrespective of the season they respond to their neighborhood. The magnitude of this neighborhood effect is ten times in magnitude (Moran's I coefficient) during periods of quantitative restrictions. In terms of policy implications for the town, one of the major concerns during drought conditions is monitoring violations of outdoor water restrictions. Hence focusing the policing efforts for example on the households in neighborhoods identified to be in the high-high cluster is likely to be effective in promoting water conservation. |
