19 May 2008

Paternalistic Water Management

An article in the Chronicle of Higher Education presents the case for "soft paternalism," i.e., helping people make choices that they would probably make for themselves but are too lazy to make.

I wonder how to apply this concept to water management, i.e., the idea that people "really do" want to save water but are too lazy to take the steps required. Here are a couple of ways to facilitate "paternalistic" water conservation:
  1. Use low-flow shower heads, faucets and toilets -- if people want to use a lot of water, they need to put in effort. (Not very soft, I admit.)
  2. Start a "water consultant" business where the consultant implements all the water conservation steps (many fixed costs) for you. You want to do it but lack willpower and/or time.
  3. Create water markets and require that "sellers" put all of their rights into the market. If they want to buy back their rights, they have to pay a market price. This method breaks the "it's my water and I pay nothing, so it's free" mentality that underpins endowment effects. (It also makes the cost of risk-aversion explicit. Sellers who are afraid of paying market prices for water will know exactly how much they will have to pay.)
These few ideas are not necessarily that good, but they do give you an idea of some ways that the lessons of behavioral economics can be applied to water management.

Please comment and/or add your own ideas of policies that encourage our "better self."