Principles, Prices and Places: Residential Water Use in Kelowna, British Columbia

2. Principles, Prices and Places: Residential Water Use in Kelowna, British Columbia John JanmaatDepartment of EconomicsUniversity of British Columbia – Okanagan Campus

3. Outline • The Okanagan Valley • Principles • Prices • Places • Conclusion

4. The Okanagan Valley • In the Southern Interior of British Columbia. • Semi-arid climate • Dry (280 – 450mm precipitation per year) • Short, relatively mild winter. • Hot summer. • “Napa Valley North” • Tourist destination • Retirement destination

5. Location Oroville to Enderby Google Earth tour Okanagan Valley Annapolis Valley

6. Climate • The Okanagan is a North – South valley in the interior plateau of BC. • Coast and Cascademountains createrain shadow. • Lack of relief on plateau makes waterstorage expensiveto build.

10. Unique Habitat • Many species found nowhere else in Canada • 172 red listed species. • Among highest concentration in Canada. • Extreme development pressures. • Immigration into Valley • Demand for single family homes near lake • Most desirable development properties also harbor unique habitat.

11. Principles • Moral Suasion • Persuade people to ‘do the right thing’ • Examples • Okanagan Waterwise • Supported by Okanagan Basin Water Board • Mail, newspaper, television, radio, internet, etc. programs to inform / convert residents. • Education material provided for schools • OBWB and NRCan, Waterscapes Poster

12. Education • Combine information with an appeal to ‘do the right thing.’

15. Kelowna Residential Survey • Telephone, internet and mail survey. • Initially telephone, with internet alternative. • Finally, mail, with internet alternative • Stratified random sample. • Coverage of different water providers. • 741 numbers called 1532 letters sent • No answer, etc. from phone part of mailing. • 516 returns, 490 complete.

16. Conservation Behaviors • Indoor Investments • Low flow shower heads, etc. • Outdoor investments • Timed irrigation, arid climate plantings, etc. • Behaviors • Turn off tap when brushing teeth, etc.

17. Indoor Investments

18. Outdoor Investments

19. Behaviors

20. Total Conservation Actions

21. Principles • Use of moral suasion common • Does it work? • Measurement • Assorted ad-hoc measurement instruments • ‘Standard’, New Ecological Paradigm

22. New Ecological Paradigm • We are approaching the limit of the number of people the earth can support. • Humans have the right to modify the natural environment to suit their needs. • When humans interfere with nature, it often produces disastrous consequences. • Human ingenuity will insure that we do not make the earth unlivable. • Humans are severely abusing the earth. • The earth has plenty of natural resources if we just learn how to develop them. • Plants and animals have as much right as humans to exist.

23. New Ecological Paradigm • The balance of nature is strong enough to cope with the impacts of modern industrial nations. • Despite our special abilities, humans are still subject to the laws of nature. • The so-called "ecological crisis" facing humankind has been greatly exaggerated. • The earth is like a spaceship with very limited room and resources. • Humans were meant to rule over the rest of nature. • The balance of nature is very delicate and easily upset. • Humans will eventually learn enough about how nature works to be able to control it. • If things continue on their present course, we will soon experience a major environmental catastrophe.

24. New Ecological Paradigm

25. NEP and Conservation C = 9.85 – 0.016NEP, R2 = 0.003

26. Knowledge

27. Knowledge and Conservation C = 8.87 + 1.45KNOW, R2 = 0.007

28. Principles - Summary • Almost no relationship between knowledge about Okanagan and water conservation. • Almost no relationship between environmental values and water conservation. • Sign even wrong! • What is causing water conservation? • Price?

29. Price • Basic Economic Theory • Marginal willingness to pay for a good decreasing in price. • Downward sloping demand curves. • Measurement • Cross sectional data, no variation in price. • Surveys at about same time. • Need price variation across space.

30. Kelowna Water Suppliers • Five water providers • Three irrigation district that supply residential. • Charge by connection. • MC zero for users. • Two urban water systems. • Charge increasing block • Spatial price diff.

31. Differences Between Providers • 1-6, Conservation counts. 7, Information sources • NO SIGNIFICANT DIFFERENCE!!!

32. Price - Summary • No variation in reported conservation behavior between water providers. • Inconsistent with expected price impact.

33. Principles vs Price • Neither Knowledge, Environmental Attitude, or Price seem to explain variation in reported conservation. • Does anything explain behavior?

34. Information Sources

35. Information Sources C = 7.19 + 0.50MSG, R2 = 0.114

36. Multiple Regression Results • Combined and interaction effects. • Outdoor investments explained best (>10%) • Indoor investment: messages, pro-environmental values and income. • Outdoor investment: messages and income. • Actions: messages, water conservation values, weakly education. • Knowledge about Okanagan and belief Okanagan facing crisis never important!

37. Principles vs Price • Environmental attitudes have at best a minor influence. • No evidence for a price influence. • But income does help explain investments. • Price too low? • Main effect from repetition of messages. • Household water use habitual, save water by changing habituation?

38. Place • In real estate, Location, Location, Location. • In water use? • Many aspects of residential property likely to affect water use. • Lot size – more yard to irrigate • House size – more people using water • Age – older, more water using fixtures • Assessed value (income proxy) – earn more, use more • Anything left over?

39. Water Use Data • City of Kelowna monthly water data • Bit of gymnastics to acquire. • BC Assessment property information • Augment with housing characteristics • City of Kelowna GIS property boundary and elevation data • Lot area, elevation, aspect, etc.

40. Monthly Water Use

41. Spatial Water Use

42. Spatial Analysis • Why is there a spatial pattern? • An artifact? • Large lots close together? • Older homes close together? • Larger homes close together? • Higher income people living close together? • Can these effects be eliminated, to isolate any remaining effect of proximity?

43. Spatial Regression • Value at A impacted by value at B, D, E. • Value at E impacted by value at A, B, C, D, F, G, H, I. • Spatial Lag, Value at E directly related to value at other locs. • Spatial Error, Unexplained value at E related to unexplained value at other locs.

44. Spatial Regression • Math gets a bit complicated. • Much computer power required. • Following slides from conference presentation. • One economist showing off to others.