UNIVERSITY PARK, Pa. — Praharsh Patel, doctoral candidate in energy, environmental, and food economics at Penn State, will give the talk, “Behavioral responses to two-part tariffs: evidence from the introduction of volumetric water pricing,” at noon on Wednesday, Sept. 25, in 157 Hosler Building at Penn State University Park.

“Water scarcity is a global challenge affecting more than 2 billion people for at least a few months each year,” Patel said. “Economists advocate using the price mechanism to manage scarce water resources, based on the neoclassical economic theory assumption that consumers respond to marginal prices. However, consumers may not fully understand complex rate structures, such as two-part tariffs, which often aim to achieve multiple policy objectives.”

Patel investigated consumer response to a shift from flat water rates to volumetric pricing in Sacramento, California. He found that on average, volumetric pricing decreased consumption by 3% to 5%, but there was significant heterogeneity across consumer groups and the lowest consumers, whose total bills decreased, increased consumption by 4% to 5%. He said this suggests that consumers do not respond to marginal prices, which has implications for the welfare effects of pricing policies and the effectiveness of using prices to manage demand.

Patel’s research focuses on water conservation policies and behavioral responses, with a particular interest in reactions to water and energy pricing in water-scarce regions of the United States and India. He is also a visiting scholar at Environment Market Labs at the University of California, Santa Barbara, where he contributes to the research agenda on agriculture in India. Praharsh previously worked at the International Water Management Institute as a pre-doctoral fellow and policy research consultant. He holds a master’s degree in mathematics from the Indian Institute of Technology Kanpur and a bachelor’s degree in physical sciences from St. Stephen’s College in Delhi, India.

The talk is part of the Energy and Environmental Economics and Policy (EEEPI) fall seminar series.