Nudging behaviour to save water | tutor2u Economics

Cape Town in South Africa is running out of water. There has been a severe drought, with very low rainfall for three years. A month ago, it was predicted that at the current rate of use, the taps would run dry on 12 April - 'Day Zero' - this video report explains why.

What can government do to help the situation? In the long term, they can build new reservoirs, and desalination plants - saltwater is desalinated to produce water suitable for human consumption or irrigation. But that doesn't solve the immediate issue that after Day Zero, residents will only be able to have 25 litres of water a day per person, for all uses, which they will collect from central collection pipes. 

Stores have placed limits on the amount of bottled water that people can buy to prevent stockpiling. The local government have asked farmers to minimise the use of irriagation, and requested that people limit their use of piped water, for now, to 50 litres a day, and only shower every other day for a maximum of two minutes - but this is hard to enforce. The free rider problem is evident - someone might think that, as long as everyone else sticks to the limits, it will be ok if their own use is a bit more than that. So a bit of behavioural economics comes in to play - if people believe the crisis has a high enough Marginal Private Cost, they will take notice and change their behaviour. 

So here are a couple of nudges being used.

The first picture probably speaks for itself - just make people think a bit before they use water. The second is a visual demonstration of how low the city's water supply is getting - the total column of bottles represents the normal water supply in reservoirs, but the blue bottles show the total supply still available - at present, only 23%.

And it's working. Water consumption has fallen from the 1,130 megalitres per day (MLD) which was measured in 2014 to 523MLD now. This is still above the target of 450MLD, but is enough to push back Day Zero to the 9th of July. A win for Behavioural Economics!

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