Agricultural Economics Department


Date of this Version



Li, W., Schoengold, K., (2016). The Potential Water Saved When USA Households Pay a Water Bill (Unpublished master thesis). University of Nebraska - Lincoln.


A THESIS Presented to the Faculty of The Graduate College at the University of Nebraska In Partial Fulfillment of Requirements For the Degree of Master of Science, Major: Agricultural Economics, Under the Supervision of Professor Karina Schoengold. Lincoln, Nebraska: July, 2016

Copyright (c) 2016 Wenfeng Li


A continuing problem for both American agriculture and our society is the shortage of usage water. This problem has become more acute as our population grows and as global warming and the demands of agriculture pushes government agencies to look for ways to save water. More efficient devices are now required and households have been asked to voluntarily restrict water usage. Although less wasteful irrigation methods have been introduced, the problem of inadequate water for agriculture has continued to grow.

Interestingly, there is one area where millions of gallons of clean water are potentially wasted each year that has been entirely overlooked. There are hundreds of thousands of apartments, condos, and housing units in America where the household never pays a water bill. In fact, one could view these units as having ‘free’ water. In these cases, the occupant may use all the water they want with no penalty for wasting this valuable natural resource. This paper has an original model that attempts to estimate potential savings if these households received a water bill for their individual water usage.

The authors use log-log model to estimate residential water demand. Data used in this analysis contains 8 metropolitan areas (Austin, TX; Boston, MA; Hartford, CT; Houston, TX; Las Vegas, NV; Minneapolis/St. Paul, MN; Orlando, FL; San Antonio, TX) and the data were collected from American Housing Survey 2013 Metropolitan Data.

Results show that increasing the marginal price of water decreases water consumption by 8%. Since the average water consumption of households that pay a bill is 10,135.23 gallons per month, if the marginal price increases by $1, then the water consumption decreases by 779.2 gallons. Overall, a shift to complete volumetric pricing will decrease average household water consumption by 5282.8 gallons per month at existing water prices. Results also show measurable differences between cities. The marginal price is negatively related to the water consumption levels and positively related to the percentage of households with ‘free’ water.

Advisor: Karina Schoengold