2. Principles, Prices and Places: Residential Water Use in Kelowna, British Columbia John Janmaat Department of Economics University 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 Cascade mountains create rain shadow. – Lack of relief on plateau makes water storage expensive to 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 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 PosterWaterscapes 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 1.We are approaching the limit of the number of people the earth can support. 2.Humans have the right to modify the natural environment to suit their needs. 3.When humans interfere with nature, it often produces disastrous consequences. 4.Human ingenuity will insure that we do not make the earth unlivable. 5.Humans are severely abusing the earth. 6.The earth has plenty of natural resources if we just learn how to develop them. 7.Plants and animals have as much right as humans to exist.

23. New Ecological Paradigm 8.The balance of nature is strong enough to cope with the impacts of modern industrial nations. 9.Despite our special abilities, humans are still subject to the laws of nature. 10.The so-called "ecological crisis" facing humankind has been greatly exaggerated. 11.The earth is like a spaceship with very limited room and resources. 12.Humans were meant to rule over the rest of nature. 13.The balance of nature is very delicate and easily upset. 14.Humans will eventually learn enough about how nature works to be able to control it. 15.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!!! Var N Mean Test Pr(>crit) BMID CITY GEID OTHER RWW SEKID 15162.5542.6700.7512.7542.6242.4402.2502.4292.658 25166.7830.7600.5797.5086.9246.5336.1256.2007.000 35162.5521.6700.8932.5232.5912.5072.6882.4862.795 45165.3800.4700.7985.3085.4015.2935.9385.1716.055 55164.0433.0800.6874.2924.0214.0133.8753.7144.288 65164.6671.1600.3294.9854.6204.6934.5624.2004.945 75163.9380.1600.9784.0923.9793.8003.8124.0294.068

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. 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. ABC DEF GHI

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

56. Spatial Analysis Strong support for spatial patterns for summer water use in Kelowna. Spatial effect not explained. – Behavioral – people do what their neighbours do? – Artificial – building regulations, soil types, etc. actually responsible. SR vs LR choices. If spatial effect ‘real’, can be used.

57. Conclusion For Kelowna: – Environmental values not closely related to water use. – Price differences have little impact. – Multiple messages seem to influence behavior. – People seem to do what their neighbours do.