Abstract

There are numerous studies regarding water pricing, demand and elasticity for certain regions. However, in Brazil, there are no studies on these matters, even though there is a need to explore the behavior of Brazil's population, especially because the nation is susceptible to extreme water events. Sao Paulo State, Brazil's most important economic region, has recently experienced a severe water scarcity status. In an attempt to control water demand, the Sao Paulo Water Agency (SABESP) implemented a ‘bonus and onus’ program. In this context, the aim of this study was to analyze the SABESP programs in terms of their structures and results using a panel model. The econometric results showed that (i) the bonus program was successful and more effective than the onus program and (ii) water consumption reduction was more significant in regions supplied by water reservoirs where the relative water level was lower, although inhabitants of other regions also reduced their water consumption.

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