Conservation Retrofits

Medium- to long-run price elasticities of demand for water are higher than short-run studies suggest. We examine data from the Los Angeles Department of Water and Power's 1983 residential energy survey. Households' decisions to install shower retrofit devices are influenced by the potential to save money on water heating bills. We attribute toilet retrofit decisions more to noneconomic factors which might be characterized as “general conservation mindedness.”

This paper examines medium-run adjustments to the existing housing stock, focusing on discrete energy conservation "retrofits" such as insulation and storm windows. Individual household data are employed in a two-level nested logit model to estimate a translog indirect utility function. Simulations reveal considerable sensitivity of the demand for retrofits to their own prices, to relative energy prices and to changes in real incomes.