The design of climate-adaptive water subsidies: financial incentives for urban water conservation in Morocco

Abstract

In a 500-household pilot, we tested an innovative approach to water demand management, implemented in collaboration with a water utility in a large city in the Middle East and North Africa (MENA) region. We provided a novel intervention, called a Water Savings Credit (WSC), which granted participants volumetric rebates on their water bills for their reductions in water consumption. WSCs were effective at encouraging conservation in our pilot in Marrakech. Our approach has the benefits of a price incentive, without the political risk of a tariff increase. For urban water utilities that provide highly subsidized services, this approach could ultimately pay for itself, or potentially result in net financial savings. Our approach may be especially effective in the countries of the MENA region, as the region has a high rate of subsidization for water services, and because it is facing increasing water scarcity from economic growth, urbanization, and climate change.