Influence of financial incentive and nudge, alone and combined, on water-saving behaviors

Abstract

Amidst increasing water resource instability in various regions, the necessity for water demand-side management (WDM) to ensure sustainable water use has grown. Recent advancements in technology have revealed the potential of various methodologies. This study examined the effect of financial incentives in the form of rebates for water conservation and nudges using a public goods approach, as well as a combination of the two, on water-saving behaviors, assuming a temporary water resource shortage. We utilized visual nudges as an intrinsic motivation recognizing water as a public good. The findings revealed that financial incentives reduced water usage in low-consumption households but had no discernible effect in high-consumption households. Although financial incentive and nudge were not synergistic, they showed negative interaction effects in high-consumption households. Participants from low-consumption households conserved water to save money on their water bills, with their already low water consumption likely due to their desire to keep their bills low. Consequently, a financial incentive in the form of a rebate for water conservation might further decrease water use. In a follow-up experiment to determine the cognitive mechanism, economic interventions like raising water tariffs significantly increased the motivation of low-consumption households to reduce their future water use. Recognizing the complexity of effective WDM, further accumulation of knowledge is needed for effective WDM.

Keywords

• Water saving
• Water demand-side management
• Financial incentive
• Nudge
• Synergistic effect