Water savings subsidy during 2015 drought in Korea

To address water shortages arising from the 2015 drought in Korea, the water authority (K-water) implemented a water savings subsidy between October 2015 and January 2016. This policy incentivized reduced consumption by offering households a rebate for each unit of water saved compared to the same month in the previous year. The rate of subsidy was 1240 KRW/m³ ($\approx$$1.10/m³) which was roughly 2.5–3 times larger than the water rate for the first block in most of municipalities. This study attempts to measure the effectiveness of the intervention and finds that it generated a roughly 4%–6% reduction in water use. We find that households consuming relatively more water (3rd and 4th quartiles in terms of baseline water consumption) reduced their use by 6.1% but households consuming relatively less water (1st quartile) reduced their use by 4%. Interestingly, there is little evidence that property value affects the reduction in water use with the intervention.