未来能源研究所-扩大范围：在存在其他行为干预的情况下排水效率的直接和溢出效应

WideningtheScope:The

DirectandSpilloverEffectsofNudgingWaterEfficiencyinthePresenceofOther

BehavioralInterventions

JacopoBonan,CristinaCattaneo,Giovannad’Adda,AriannaGalliera,

andMassimoTavoni

WP23-46

December2023

ResourcesfortheFuture

1

AbouttheAuthors

JacopoBonanisanaffiliatedscientistwiththeEuropeanInstituteonEconomicsandtheEnvironment(EIEE)andanassistantprofessorattheSchoolofManagementofPolitecnicodiMilano.

CristinaCattaneoisascientistatEIEE,wheresheisheadoftheresearchareaonHumanMigration.

Giovannad’AddaisanassistantprofessorattheUniversityofMilanandascientistatEIEE,wheresheisheadoftheresearchareaonBehavioralScience.

AriannaGallieraisanaffiliatedscientistwithEIEEandanassistantprofessorintheDepartmentofEconomicsandFinanceatUniversitàCattolicadelSacroCuore.

MassimoTavoniisthedirectorofEIEEandafullprofessorattheSchoolof

ManagementofPolitecnicodiMilano.

Acknowledgments

WearethankfultoFabrizioMauri,MarcelloFolesani,andMonicaCrippaforthefruitfulcollaboration.WethankSaraConstantino,LukasFesenfeld,ElkeWeber,seminar

participantsatBankofItaly,GATE-Lab,andETHforhelpfuldiscussionand

ConferenceparticipantsatESA2022.MilicaVranicandMatteoMuntoniprovided

excellentresearchassistance.WeacknowledgefinancialsupportfromtheH2020-

MSCA-RISEprojectGEMCLIME-2020GANo.681228;theEnergyDemandChanges

InducedbyTechnologicalandSocialinnovations(EDITS)project,whichispartoftheinitiativecoordinatedbytheResearchInstituteofInnovativeTechnologyfortheEarth(RITE)andInternationalInstituteforAppliedSystemsAnalysis(IIASA)(andfundedbyMinistryofEconomy,Trade,andIndustry(METI),Japan);NEWTRENDS(NewTrendsSinEnergyDemandModelling)project,fundedbytheEuropeanCommissionGrant

agreementID:893311.Heracomprovidedfinancialsupportandwasinvolvedintheexperimentaldesignandstudydatacollection.ThisRCTwasregisteredinthe

AmericanEconomicAssociationRegistryforrandomizedcontroltrialsundertrial

numberAEARCTR-0006546.Declarationsofinterest:none.

NudgingWaterEfficiencyinthePresenceofOtherBehavioralInterventions

2

AboutRFF

ResourcesfortheFuture(RFF)isanindependent,nonprofitresearchinstitutionin

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committedtobeingthemostwidelytrustedsourceofresearchinsightsandpolicysolutionsleadingtoahealthyenvironmentandathrivingeconomy.

Workingpapersareresearchmaterialscirculatedbytheirauthorsforpurposesof

informationanddiscussion.Theyhavenotnecessarilyundergoneformalpeerreview.Theviewsexpressedherearethoseoftheindividualauthorsandmaydifferfrom

thoseofotherRFFexperts,itsofficers,oritsdirectors.

SharingOurWork

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ResourcesfortheFuture

3

Abstract

Policymakersandfirmsusebehavioralinterventionstopromotesustainable

developmentinvariousdomains.Correctlyevaluatingtheimpactsofanudgeon

behaviorandsatisfactionrequireslookingbeyondthetargeteddomainandassessingitsinteractionswithsimilarinterventions.Existingevidenceontheseaspectsis

limited,leadingtopotentialmisestimationofthecost-effectivenessofthistypeof

interventionandpoorguidanceonhowtodesignthembest.Throughalarge-scalerandomizedcontrolledtrialimplementedwithamulti-resourceutilitycompany,wetesttheimpactofasocialinformationcampaigntonudgewaterconservationovertwoyears.Wefindthatthewaternudgesignificantlydecreaseswaterandelectricityusagebutnotgas.Theeffectisdrivenbycustomerswhodonotreceivenudges

targetingtheotherresources.Customersreceivingthewaterreportarealso

significantlylesslikelytodeactivatetheirgasandelectricitycontracts,regardlessofwhethertheyreceiveotherreports.Ourresultssuggestthatmultiplenudgesstrainusers’limitedattentionandabilitytoenactconservationefforts.Users’constraintsin

attendingtomultiplestimuliposeimportantchallengesfordesigningpolicy

interventionstofostersustainablepractices.

1

Wideningthescope:Thedirectandspillovereffects

ofnudgingwaterefficiencyinthepresenceofotherbehavioralinterventions*

J.Bonan1,2,C.Cattaneo2,G.d’Adda3,2,A.Galliera4,andM.Tavoni1,2

1PolitecnicodiMilano

2RFF-CMCCEuropeanInstituteonEconomicsandtheEnvironment

3UniversityofMilan

4UniversitàCattolicadelSacroCuore

Abstract

Policymakersandfirmsusebehavioralinterventionstopromotesustainabledevelopmentinvariousdomains.Correctlyevaluatingtheimpactsofanudgeonbehaviorandsatisfactionrequireslookingbeyondthetargeteddomainandassessingitsinteractionswithsimilarinter-ventions.Existingevidenceontheseaspectsislimited,leadingtopotentialmisestimationofthecost-effectivenessofthistypeofinterventionandpoorguidanceonhowtodesignthembest.Throughalarge-scalerandomizedcontrolledtrialimplementedwithamulti-resourceutilitycompany,wetesttheimpactofasocialinformationcampaigntonudgewaterconserva-tionovertwoyears.Wefindthatthewaternudgesignificantlydecreaseswaterandelectricityusagebutnotgas.Theeffectisdrivenbycustomerswhodonotreceivenudgestargetingtheotherresources.Customersreceivingthewaterreportarealsosignificantlylesslikelytodeac-tivatetheirgasandelectricitycontracts,regardlessofwhethertheyreceiveotherreports.Ourresultssuggestthatmultiplenudgesstrainusers’limitedattentionandabilitytoenactconser-vationefforts.Users’constraintsinattendingtomultiplestimuliposeimportantchallengesfordesigningpolicyinterventionstofostersustainablepractices.

*WearethankfultoFabrizioMauri,MarcelloFolesani,andMonicaCrippaforthefruitfulcollaboration.WethankSaraConstantino,LukasFesenfeld,ElkeWeber,seminarparticipantsatBankofItaly,GATE-Lab,andETHforhelpfuldiscussionandConferenceparticipantsatESA2022.MilicaVranicandMatteoMuntoniprovidedexcel-lentresearchassistance.WeacknowledgefinancialsupportfromtheH2020-MSCA-RISEprojectGEMCLIME-2020GANo.681228;theEnergyDemandChangesInducedbyTechnologicalandSocialinnovations(EDITS)project,whichispartoftheinitiativecoordinatedbytheResearchInstituteofInnovativeTechnologyfortheEarth(RITE)andInternationalInstituteforAppliedSystemsAnalysis(IIASA)(andfundedbyMinistryofEconomy,Trade,andIndus-try(METI),Japan);NEWTRENDS(NewTrendsSinEnergyDemandModelling)project,fundedbytheEuropeanCommissionGrantagreementID:893311.Heracomprovidedfinancialsupportandwasinvolvedintheexperimen-taldesignandstudydatacollection.ThisRCTwasregisteredintheAmericanEconomicAssociationRegistryforrandomizedcontroltrialsundertrialnumberAEARCTR-0006546.Declarationsofinterest:none.

2

Keywords:Socialinformation,spillovereffects,resourceconservation

JELClassification:Q5,Q25,D9

1Introduction

Promotingsustainabledevelopmentpracticesrequiresfosteringbehavioralchangeinvariousdo-mains,whichhavedifferentimpactsandcosts.Behavioralinterventions,suchasnudges,havebeenusedatlargebygovernmentsandbusinessestopromoteproenvironmentalbehavioramongcitizensandcustomers.However,theirimpactistypicallyevaluatedinanarrowsense.First,mostresearchfocusesontheoutcomedirectlytargetedbytheintervention,ignoringpotentialspillovereffectstootherrelatedbehaviors.Second,impactevaluationsfocusonconsumption,butfromboththepolicyandbusinessperspectives,customersatisfactionandretentionareequally,ifnotmore,importantoutcomes.Theimpactofnudgesmaybereducediftheyinduceavoidancebe-havior,whichisalsoasignoftheirnegativewelfareeffects.Finally,littleevidenceexistsontheeffectivenessoftheseinterventionswhensimilaronessimultaneouslytargettheirrecipients.Foracorrectevaluationandeffectivedesignofsustainablenudges,itthereforematterswhetherthebe-havioralchangeinducedinonedomainhaspositiveornegativespilloversinotherdomains;theseinterventionsalienatecustomers,possiblydivertingthemtowardscompaniesthatarelessfocusedonpromotingsustainableconservationpractices;andthecombinedeffectofnudgesissmallerorlargerthantheimpactofeachoneinisolation.Theseconsiderationsaretimelyandrelevant,givenpolicymakersandfirms’expandinguseofbehavioralnudgesandtheresultingincreaseinthelikelihoodthatconsumersareexposedtomultiple,possiblyoverlappinginterventions.

Weaddressthesequestionsinthecontextofasocialinformationprogramforwaterconservation.Weleveragetherelationshipwithalargemulti-utilitycompanyprovidingwater,electricity,andgastoitscustomers.Throughalarge-scalerandomizedcontrolledtrial(RCT),watercustomersreceiveareportwithinformationabouttheirwaterusage,socialcomparisonwithneighbors’us-age,andtipsforconservation.Weevaluatethedirectimpactofthereportonwaterconsumptionandtheindirectimpactsonelectricityandgas.Wealsostudytheprogram’simpactoncustomerengagementandretentiontomeasuretheimplicationsfornotjustresourceusagebutalsocustomersatisfaction,whichisrelatedtoindividualwelfareeffects.Weexploitthevariationinsendingsim-ilarreportsthattargetotherresources,electricityand/orgas.Westratifyassignmenttothewaterreportbasedontheotherreportsreceivedbycustomersandassesswhetherreceivingmultiplere-portsinfluencestheeffectivenessofthewaterreport.Finally,wediscussthepotentialmechanismsbehindourresults.

Inourprespecifiedanalysis,wefindthatthewaterreportsignificantlydecreaseswaterusageby1.4

3

percentandelectricityusageby0.5percent,buthasnosignificantimpactongasovertwoyears.Themagnitudeofthespillovereffectonelectricityiscomparabletothedirectoneofsimilar

programsinEurope(Bonanetal.,

2020).Thewaterreportalsoleadstohighercustomerretention.

Treatedgasandelectricitycustomersare2.8and3percentlesslikelytodeactivatetheircontracts

thancontrolones.1

Theresultsonconsumptionarerobusttomultiplehypothesescorrectionandchangesinthesampletoaccountforattritionduetocontractdeactivation.

Theimpactofthebehavioralprogramisdrivenbycustomersforwhomthewaterreportistheonly

onereceived:withinthisgroup,theprogramreduceswaterandelectricityusageby2.4and1.3%,respectively.Theprogram’simpactoncustomersalreadyreceivingotherreportsatbaselineisnonsignificant.Thepositiveimpactofnudgingoncustomerretentionisindependentofhowmanyreportstheyreceive.Wearguethatthelackoftheeffectofthewaterreportwhenitisaddedtootherreportsispartlyduetousers’limitedabilitytoattendtomultiplestimuli.Inparticular,thewaterreportreducestheattentionthatuserspaytoeachsinglereport,limitingtheconservationgainsthattheycanachieveineachdomain.Onewaytoreducethecostofattendingtomultiplereportsandthusincreasetheireffectivenessistosendthereportsjointly.Amongcustomersreceivingmultiplereports,wefindthatconservationislargerifreportsaresentsimultaneously.

Ourresultsoncontractcancellationandengagementindicatethattheadditionalreportdoesnotgeneratenegativecustomerreactionseventhoughitisineffectiveatfosteringownandcross-resourceconservation.

Theinterpretationoftheheterogeneouseffectofthewaterreportbyreceiptofotherreportscru-ciallydependsonwhetherhouseholdcharacteristicssimultaneouslyaffectthelikelihoodofreceiv-ingmultiplereportsandthereactiontothetreatment.Ouranalysiscontrolsfortime-invarianthouseholdtraitsthatmayaffectselectionintomultiplereportsthroughhouseholdfixedeffects.Tofurtheraddressconcernsoftime-varyingconfounders,weexploitinformationonthecontractsof-feredbytheutilitytoidentifysamplesforwhomconcernsaboutself-selectionintomultiplereportsarelessrelevant.Theheterogeneouseffectsbymultiplereportsarerobusttousingtheserestrictedsamples.Wethereforeexcludethattheheterogeneouseffectsareentirelydrivenbyself-selection.Asforthemechanisms,weprovidesuggestiveevidenceofbehavioralspilloversdominatingtech-nologicalones.Althoughtechnologicalspilloversresultfrommechanicalsynergiesbetweentheuseofdifferentresources,behavioralspilloversarisefromadesiretoconsistentlyconservere-

sourcesdrivenbyenvironmentalconcerns.Accordingtoourresults,suchbehavioralspilloversmaybepreventedbythecognitiveandattentionconstraintstriggeredbythereceiptofmultiplereports.

Ourstudyaddstoagrowingliteraturethatevaluatestheeffectivenessofsocialinformationpro-

1Althoughthegasandelectricityretailmarketsareliberalized,andcustomerscanfreelychoosetheirproviders,the

watermarketisregulated,andcustomerscannotchangeproviders.

4

gramsandfeedbackonresourceconservation(Allcottetal.,

2011;

AllcottandRogers,

2014;

Ayres

etal.,

2013;

Tiefenbecketal.,

2016,

2019;

Fangetal.,

2023).2

Severalexperimentalstudieshavespecificallylookedatthedirectimpactofsocialinformationaboutwaterusageonwaterconsump-

tion,mainlyintheU.S.context(FerraroandPrice,

2013;

Ferraroetal.,

2011;

FerraroandMiranda,

2013;

Bernedoetal.,

2014;

Brentetal.,

2015;

Hodgesetal.,

2020).Theevidencedocumentsshort

-termwaterconservationeffectsupto5percent.Theeffectcanpersistoverlongertimehorizons,

althoughitis50percentsmallerafteronlyoneyear(Ferraroetal.,

2011;

Bernedoetal.,

2014)

.3

Theseeffectsareattributabletoshort-livedbehavioraladjustmentsandmorepersistentchangesinhabitsandphysicalcapital.Morerecently,

Jessoeetal.

(2021)usedhigh-frequencywatercon

-sumptiondatatoevaluateahomewaterprograminCaliforniaduringadroughtperiod.Theyfounda4-5percentreductioninwaterusage,buttheeffectdissipatedfivemonthslater.

Ourpapercontributestothisliteratureindifferentways.First,relativelyfewpapersrigorouslyaddressthespillovereffectsofthesocialinformationreportontheconsumptionofotherresources.

Jessoeetal.

(2020)examinecross-sectoralspilloverusingone-yearposttreatmentdataonwater

andelectricityusagefortheUnitedStates.Theyfindthathomewaterreportsinducea1-2percentreductioninsummertimeelectricityuse,whichdisappears4-5monthsposttreatment.

Carlsson

etal.

(2020)findthatasocialinformationcampaignonwaterusehadapositiveandsizeable

spillovereffectonelectricityusageforhouseholdsexperiencingpositivedirecteffects.

Goetz

etal.

(2022)evaluatetheeffectsofahot-water-savinginterventionandfindpersistentdirectand

spillovereffectsondishwasheruseandtoiletflushing,butnoeffectforelectricity.4

Ourpaperevaluatesspillovereffectsonabroadersetofbehavioraloutcomes,namelyelectricityandgas,andoveramoreextendedperiod,twoyearsaftertreatment,allowingustodisentangleconsiderationsofpersistenceoftheeffectsfromseasonalityinresourceusage.

Second,weevaluatetheimpactofthewaterreportoncustomers’retentionandengagement.Theseaspectsarecrucialforbusinessesinthissectorandpolicymakersinterestedinthewelfareim-

2See

Gillinghametal.

(2018);

Abrahamse

(2019);

Gerardenetal.

(2017)forabroaderdiscussionoftheenergy

efficiencygapandtheassessmentofenergyefficiencypolicies.Anextensiveliteraturealsoevaluatessocialinfor-

mationprogramsinseveralotherdomains,fromcontributionstocharitablecauses(FreyandMeier,

2004;

Shang

andCroson,

2009),totechnologyadoption(Bonanetal.,

2021a;

GillinghamandBollinger,

2021),voting(Gerber

andRogers,

2009),wastedisposal(Bonanetal.,

2023)andfinancialdecisions(Beshearsetal.,

2015).Morebroadly,

areviewofinformation-basedinterventionsonresidentialcustomers’resourceconsumptioncanbefoundin

Nemati

andPenn

(2020)and

Delmasetal.

(2013)

.

3Indevelopingcontexts,

Mirandaetal.

(2020)find3-5percenteffectsinCostaRica,while

JaimeTorresandCarlsson

(2018)find6.8percentwaterreductiononcustomerstargetedbyhomewaterreportand5.5percentdecreaseon

untargetedcustomerslivingclose-by(cross-individualspillover)inColombia.

4

Otherpaperslookatbehavioralspilloversinwastedisposalandrecycling(EkandMiliute-Plepiene,

2018;

Alacevich

etal.,

2021;

Sherif,

2021)

.Beyondthissmallnumberofstudies,literatureexistsonbehavioralspilloversintheenvironmentaldomain,withmixedevidence.Suchvariabilityinresultscanbepartiallyexplainedbythesignificant

differencesinthemethodsusedtoquantifyimpacts(GalizziandWhitmarsh,

2019)andtomeasurebehavioral

outcomes–rangingfrombehavioralintentionstopolicysupport,self-reportedbehaviors,andactualbehaviors–(Maki

etal.,

2019)

.

5

pactsoftheseprograms.Aftertheliberalizationofenergymarkets,manystudieshaveanalyzedhouseholdcontractswitchingchoices(orlackthereof)andunderlinedtheroleofbothpriceand

nonpriceattributes(Hortaçsuetal.,

2017;

ShinandManagi,

2017;

Fontanaetal.,

2019;

Schleich

etal.,

2019).

Brentetal.

(2015)examinewhetherasocialcomparisoninterventionaffectsother

utilityconservationprograms,suchasfreehomewaterauditsandrebatesforefficienttoiletsorirrigationcontrollers.Theyfindthatreceivingthehomewaterreportincreasesprogramparticipa-tion.Farsmallereffectsarefoundby

AllcottandRogers

(2014).However,theroleofcustomized

proenvironmentalinformationcampaignsoncustomerretentionappearsunexplored,despiteitsimportanceforbusinessandsociety.Inoursetting,reducingchurnwasakeyobjectiveofourpart-nerutility,whichfacedyearlycontractdeactivationratesof10.5and11.5percentintheliberalized

gasandelectricitymarkets,respectively.5

Ourresultsrelatedtothelowerdeactivationofgasandelectricitycontractsfollowingthewaterreportprovidethefirstexperimentalevidenceoftheroleofgreennudgesinboostingoverallcustomers’experienceandloyalty.

Third,weassesstheeffectofreceivingmultiplenudges.Relativelyfewstudieshavetackledthisis-

sueandcombineddifferentnudgeswithinthesameintervention.6

Yet,thisquestionisrelevantforpolicymakersandbusinesses,astheytargetavarietyofinformationcampaignstothesamebehav-

ioraloutcomes,oftenthroughmultiplechannels(Montagutietal.,

2016).Whetherthecumulative

effectofmultiplenudgesislargerorsmallerthanthesumofeachoneinisolationisanopenem-piricalquestion.Themarginaleffectofadditionalenergyconservationnudgesmaybedecreasingifthefirstonehasalreadyinducedareductioninconsumption.Anestablishedfindinginthisliter-atureisthattheimpactofnudgesdecreasesasthemarginsforreductionshrink,evenbackfiringfor

lowusers(Byrneetal.,

2018;

Bhanot,

2017;

Bonanetal.,

2020).Similarly,willingnesstopayto

receivesocialinformationnudges,similartotheonewestudy,isloweramonglowusers(Allcott

andKessler,

2019).Alternatively,recipientsmaybelessattentivetoadditionalnudgesifcogni

-

tiveconstraintslimittheamountofinformationthattheycanabsorb(GigerenzerandGaissmaier,

2011);oriftheytrytoavoidthesocialpressureofreceivingmanynudges,asdemonstratedbythe

literatureoninformationandaskavoidance(Andreonietal.,

2017;

ExleyandPetrie,

2018;

Adena

andHuck,

2020;

Serra-GarciaandSzech,

2022;

Golmanetal.,

2022).Thismightleadtoabacklash

againstthecompanyandasocietallossarisingfromadditionalresourceusage.Conversely,multi-plenudgesmayincreaseindividuals’awarenessofexistingsynergiesbetweenbehaviors,heighten

thesalienceofenvironmentalconservationmotives(Bonanetal.,

2021b),andreassureabouta

firm’scommitmenttosustainabledevelopmentratherthanmeregreenwashing.Previousworkshavelookedattheinteractionofdifferentnudgesininfluencingoneormoreoutcomeswithinthe

5

Atthenationallevel,yearlycontractswitchingintheelectricitysectoris15.7percent(ARERA,

2022)

.

6Severalpapershavefocusedontheinteractionbetweennudgesandeconomicincentivesindifferentcontextsand

reachedmixedresults(Pelleranoetal.,

2017;

Sudarshan,

2017;

Listetal.,

2017;

Holladayetal.,

2019;

Giaccherini

etal.,

2020;

Bonanetal.,

2023)

.

6

samebehavioralsphere,e.g.,waterorelectricityusage(Hahnetal.,

2016;

Brandonetal.,

2019;

Bonanetal.,

2020,

2021b;

Fangetal.,

2023).Theimpactofnudgeinteractionsappearsheteroge

-neousandincreasesintheabilitytotargetrelevantandconsistentsourcesofbiaseffectively.Wecontributetothisnascentliteraturebyprovidingevidenceontheheterogeneousimpactofareportdependingonthereceiptofothersimilarreports.Unlikepreviouswork,welookattheimpactofthesamenudgetargetedtodifferentbehavioralspheres,i.e.,water,gas,andelectricityusage.We

provideevidencethatmultiplenudgesdepleteconsumers’limitedattentiontowardsthedifferent

resources.

Finally,wetrytodistinguishtechnologicalandbehavioralmechanisms.Thepsychologicalliter-aturediscussesthebehavioralsourcesofspillovereffectsintheenvironmentaldomainandhow

interventionscanbedesignedtomaximizethem(Trueloveetal.,

2014;

DolanandGalizzi,

2015;

Nilssonetal.,

2017).Behavioralspilloverscanbenegative–wherebyadoptinganactionreduces

theprobabilityofanotherproenvironmentalactionbeingtaken–orpositive.Negativespilloverscanbeduetomorallicensing,limitedcognitiveabilities,andwillpower.Positivespilloversmayresultfromadesireforconsistencyacrossdomainsandtofulfillbroadenvironmentalobjectives.Policiesprimingsuchhigher-ordergoalsandavoidingdemandinginitialrequestsaremorelikelytohar-nesspositiveratherthannegativespillovers.Beyondthesepsychologicalmechanisms,spilloversinresourceusagemayoccurbecauseoftechnologicalsynergiesbetweendifferentbehaviors.Ourfindingsthatthespillovereffectsonelectricityarestrongerwhenthereportmentionsbroaden-vironmentalgoalsandisdeliveredjointlywiththeotherreportssuggesttherelevanceofpositivebehavioralspillovers.Thisresultisconsistentwiththeevidencein

Jessoeetal.

(2020),where

technologicalspilloverscomplementbehavioralones.

Theremainderofthepaperisorganizedasfollows.Section2describesthesettingofthestudy.Section3providesdetailsofthedesignanddataoftheRCT.Section4presentstheempiricalstrategyandresultsindetail.Section5discussesthemechanismsbehindourfindings,andSection6concludes.

2Setting

WecollaboratewithGruppoHera(henceforth,Hera),whichserves4.3millionItaliancustomersin330municipalities,mainlylocatedinthecenter-northofItaly,specificallyintheregionsofEmilia-Romagna,Veneto,Friuli-VeneziaGiulia,Marche,Tuscany,andAbruzzo.Ourstudyfocuseson

customersofwaterserviceslocatedinEmilia-Romagna.7

7SpecificallyintheprovincesofBologna,Forli-Cesena,Ferrara,Modena,Ravenna,andRimini.In2019,Herascoredthirdinthedomesticretailmarketforelectricityandgas,withmarketsharesof3.3and11.3%,respectively.Thesesharesdidnotvarysignificantlyoverthefollowingyears.

7

ThewatermarketinItalyisregulatedatthenationallevelbyARERA(Autorita’diRegolazioneperEnergiaRetieAmbiente).Tariffsareestablishedbyutilitiesatthemunicipalleveltocoveroperatingcosts,investments,andfinancialandtaxchargesbutmustbeapprovedbyARERA.Thegasandelectricitymarketswereliberalizedin2007.Theliberalizationprocesshasbeenslow,withover42percentofdomesticcustomersstillbuyingtheirenergyattheconditionssetby

thepublicauthorityforenergyasof2021(ARERA,

2022)

.Thecompletetransitiontothefreemarkethasbeenpostponedseveraltimesandisnextscheduledfor2024.Untilthen,customerscanchoosebetweencontractsintheregulatedmarket,withtariffsapprovedbytheauthorityasinthewatermarket,andcontractsinthefreemarket.Utilitiescompeteinthefreemarketthroughdiversifiedpriceoffers.Inthecontextofourstudy,animportantimplicationofthedistinctionbetweenregulatedandliberalizedmarketsisthatcustomersinthewaterm