(E3 ) Working Papers Series
E3 Working Paper WP-025 Abstract
WP-025: Nada Wasi and Richard T. Carson, "The Influence of Rebate Programs on the Demand for Water Heaters: The Case of New South Wales" (October 2011) Full Paper
Abstract
This paper examines the role of Australian hot water system rebate programs in shifting the existing stock of electric water heaters toward more climate friendly versions using two unique data sets from New South Wales homeowners. The first data set is based on a survey of households who recently purchased a water heater before and after the rebate programs were in place. The other is based on a set of stated preference questions from households owning an older water heater who will soon face a replacement decision. We find that recent rebate programs significantly increased the share of solar/heat pump systems. For households without access to natural gas, this increased share comes directly from inefficient electric water heaters. For households with access to natural gas, existing electric water heaters would likely have been replaced with gas water heaters without the rebate programs. The programs appear to be much less effective when water heaters are replaced on an emergency basis. Data from discrete choice experiments were analysed using several choice models. Two newly proposed models using more flexible heterogeneity distribution clearly dominate mixed logit and latent class models currently in use. Predictions from our preferred model are reasonably consistent with actual purchase data. Results suggest considerable heterogeneity with respect to household preferences toward different types of water heaters and with respect to the discount rates they hold.