Literature and Research Review of the Factors Affecting Consumer Behaviour in relation to Domestic Water Consumption for the FIRMA Model
Reviewing literature and research relevant
to modelling consumer behaviour especially in relation to domestic water
consumption was found to be valuable for the FIRMA model. In order to more realistically model
consumer behaviour, significant factors found affecting this behaviour need to
be identified. The research review that
follows is based upon 1½ months of literature review and source evaluations
which either quantitatively or qualitatively examined or suggested significant
factors of influence. Results indicate
that the studies already completed are scattered across various disciplines,
lack temporal and spatial continuity and can provide only preliminary data and
information for the FIRMA model.
Although incomplete and inconsistent in general, the preliminary
information is useful because: 1) it
identifies weaknesses in previous research; 2) suggests factors that can be
incorporated into the FIRMA model with some reliability; and 3) provides
directions for further review and evaluation.
The review focused on studies and information about domestic water consumption in the United Kingdom and the Thames Valley. The reason for this focus was to provide relevant information for the Thames Valley case study in the FIRMA project. In addition, the resulting information and evaluations may provide a foundation for extended application over a wider area later. There were a variety of data and information sources identified. Independent social and marketing research organizations, consumer interest councils, regulatory government agencies, scientific and engineering institutes and water companies have all produced some studies related to domestic water consumption and/or behaviour. Information and data about the United Kingdom and the Thames Valley also suggested that consumer behavior has, until recently, remained separated from issues of water consumption. As a result, there were few sources that addressed them as a combined topic of analysis. A difference between the types of research was also found. Research on consumer behaviour in the U.K. has been qualitative, relying mostly on in depth interviews, whereas research on water consumption has been mainly quantitative and based on actual water demand data, annual counts of disconnections and changes in consumer costs and water company profits. Therefore, it is not surprising that research which has validated either a formal correlation or functional relationship between various influences on domestic water consumption behaviour has been limited. Recent research is addressing the situation. Unfortunately, not all of this research is presently accessible and could therefore not be included in this report. The known but inaccessible information will be identified in the report where it is valuable. Future access may be possible through later negotiation and cooperation. In order to understand these findings in more detail, the following report will include five sections: 1) a review of domestic water consumption research in general; 2) a review of domestic water consumption research in the U.K. and Thames Valley;
3) fundamental studies; 4) missing research; and 5) implications for further work and the FIRMA project.
In the United Kingdom, no national Water Use Program has been established and most consumer research follows the same trends as consumer research in general. The earliest record found that showed some trends in domestic water consumption was documented by the Water Research Centre (WRC). It showed trends of increased water consumption from 1961 to the 1980s (Bailey, 1986). However, neither the USGS nor the WRC report give any statistical foundation linking these demand/use trends to specific factors that were influencing consumer behaviour. In 1969, Judith Rees suggested that water consumption in the U.K. was not a research priority because it had been established as an extremely cheap and easily accessible utility since the late 19th century (Rees, 1969). She observes, however, that demand for water and water quality concerns began to increase in the 1960s following a rise in the standard of living (Rees, 1969). Unfortunately, this suggested cause was not studied in depth and only provided a suggestion for future research.
In the 1970s and 1980s, the most important water resource-related events were experiences of drought and the privatisation of utility industries. In the 1970s, the main water resource-related event was the drought of 1975-76. As a result, most studies concerning water consumption focused primarily on ways to avoid similar crises in the future. Publicity, legal restrictions, and pressure control were all mentioned as effective measures taken during the drought to influence water consumption of domestic consumers (Institution of Water Engineers and Scientists & the Institution of Civil Engineers, 1977). However, no specific measurements or surveys were taken to evaluate such influences. In the 1980s, the government began to privatise all of the utility industries, including the water industry in 1989. Consequently, most of the literature related to water resource use was concerned with the process of privatising the industries rather than focusing on consumer interests and domestic water consumption trends (Institution of Civil Engineers, 1980; Department of the Environment, 1985; Littlechild, 1986; and the National Consumer Council, 1989). However, privatisation efforts and the consequent parliamentary Acts did recognize the importance of domestic consumer interests and assumed some responsibility in eventually representing their interests (Water Act, 1989).
In the 1990s, post-privatisation studies were completed which included the opinions and experiences of the domestic consumer as particularly relevant to national policy regulations as well as to the management of water companies. Increased metering, better clarity and comprehensibility about bills, equity issues about charges and the quality of service offered by the water companies (OFWAT, 1991; OFWAT, 1997, National Consumer Council, 1993) were all identified as consumer concerns through surveys and questionnaires. How these concerns actually affected consumption behaviour, however, has yet to be determined. Concerning general consumer ‘willingness-to-pay’ issues, a comprehensive study focusing on increasing water debt for domestic consumers identified a number of different factors that influenced consumer payments of water bills. The factors included the following: different levels of income, national recessions, geographical differences, family circumstances, demands on household budgets, attitudes towards paying and approaches to money management, age and lifecycle effects (Herbert & Kempson, 1995). This study obviously focused on consumer payment behaviour rather than consumer water consumption behaviour but it did indicate that these factors may also influence consumption trends as well. A complimentary study that examined consumer ‘willingness-to-conserve’ would have been a helpful addition. This section has provided a general overview of the research trends in domestic water consumption behaviour over the past forty years in the U.K. Specific research projects that could be especially relevant to the FIRMA project will now be discussed.
Probably the first relevant research project that was carried out in the U.K. that directly identifies, tests and explains a factor that influences domestic water consumption behaviour over time was the National Water Metering Trials (1989-1993) whose results were published in September 1993 by the Water Services Association (WSA). In the report, metering and the costs that it incurred for the domestic consumer was shown to cut demand for water. On the Isle of Wight, for instance, 50,000 households were metered and the per capita household demand for water fell by 21% (WSA, 1993). There were another eleven sites that were involved in the study (a total of 10,000 households) and results showed that demand fell by 11% (WSA, 1993). Over the trial period, water consumption also showed a consistent decline. Although encouraging, another report suggested that the results could not be assumed universal. The SODCON (East Anglian regional Survey of Domestic Water Consumption) five-year study began in 1991 because Anglian Water did not feel that the available studies were applicable to their region. The company thought that the National Metering Trials, a South West Water study (Hooper, 1979), and a Severn Trent Water study (Thackray, 1978) were unable
“to provide Anglian Water with the specific information required because, although these studies may have been representative of their own area, they failed to provide data which could be reliably transferred to the region of East Anglia. The National Metering Trials were not established to be studies of domestic consumption per se, and the regional studies in South West and Severn Trent Water were only statistically relevant to their respective regions.”
(Edwards & Martin, 1995)
The SODCON study involved 2,000 properties and showed that per capita consumption (PCC) could be related to four main variables: 1) household size;
2) housing type based on ACORN (A Classification of Residential Neighborhoods, a geodemographic classification system for small areas) groups (CACI Information Services, 1981); 3) socio-economic groupings (income bands); and 4) rateable value of properties (Edwards & Martin, 1995). Despite their initial assumptions about uniqueness, the Anglian report showed that “The average value for PCC accords with the estimate for domestic consumption used by Anglian Water and aligns with other companies’ data (Edwards & Martin, 1995).” Clearly, assumptions and evidence about consistency or inconsistency between regions will be important for the FIRMA model and must be addressed as early as possible. Even though Anglian Water results suggested consistency, the company still argued that “it would be wrong to draw any close comparisons with other studies (Edwards & Martin, 1995).”
A similar study has not been pursued for the Thames Valley and access to Thames Water information has been limited. However, the company has established a demand forecasting methodology[4] and combined their efforts with different research organizations such as Claritas UK in order to characterize their consumer population. Claritas UK is a supplier of consumer lifestyle data which provides its clients with targeting and segmentation possibilities. Their Lifestyle Universe database which supposedly tracks demographic and purchasing behaviour data on 75% of UK households assisted the Thames Water company in developing their own marketing database which continues to track the behaviour of Thames Valley water customers (Case Studies – Thames Water. http://www.claritas.co.uk/v4/index.htm). Unfortunately, access to this database or to information supporting Thames Water demand forecasting was not attainable for this review. The Office of Water Services, the government regulator, has done studies on recent patterns of demand for water in England and Wales (OFWAT, 1996) and produces annual reports on costs of water delivered, sewage collection and leakage and water efficiency. However, they have not provided much information on consumer behaviour and have not provided too many details about the Thames Valley (besides leakage, water costs and sewage collection data). As a result, presently accessible information about factors influencing consumer behaviour in the Thames Valley is extremely limited and will be difficult to characterize.
Sources of information and data about U.K. and Thames Valley domestic water consumption behaviour are obviously scattered, limited, and inaccessible at times. The most important conclusion that can be made for the FIRMA project is that assumptions built into the FIRMA model about domestic water consumption behaviour should be made very carefully. There are a number of variables that could potentially prove to affect consumption behaviour but have not been thoroughly examined yet. Also, attention must be paid to the nature of the data available (i.e., “actual” consumption data vs. data that have not been influenced by dynamic variables such as weather and the economy). And, finally, the recognition of possible place-dependent behaviour should also be made when characterizing agents in the final model.
This report was primarily based upon U.S. and U.K. sources in English. It could be reinforced much more with focused research in other languages and literatures. In order to develop a more sophisticated model and create a broader European context for water consumption behaviour, this extension would be highly recommended. Furthermore, a broadened research could identify quantitative and qualitative sources that could reinforce the value of the “suggested” factors introduced in this report. The studies reviewed in the report have generated a long list of factors that suggest or have proven to affect domestic water consumption behaviour. The factors that may be significant but have not been reliably proven in relation to domestic water consumption include: the media; “neighbors” (communication with family and friends); increased environmental education; and laws and regulations. The other factors that have been suggested in the literature and research review may or may not be significant but further review and testing are required to determine their status. For the full list of factors (proven and suggested) identified please refer to the Appendix attached at the end of this review. Many of them were not mentioned in this review because of their lack of direct relevance to the FIRMA project or their lack of supporting qualitative or quantitative evidence. They are important, however, because they show the wide range of factors identified or suggested in consumer behaviour and water consumption research and may indicate valuable suggestions for future research.
The implications of this review suggest that, in general, a mapping of consumer behaviour in Europe and the factors that affect it could be extremely useful for the development of the FIRMA model. If common categories as well as place-specific categories could be established between the different European regions then agent behaviour could be supported with more evidence and reliability. As a result, the model could more realistically inform freshwater management policy at different scales with both historic and predictive evaluative authority.
References:
Bailey,
R.J., et al. 1986. Domestic Water Use Patterns. Marlow, Buckinghamshire: Water
Research Council (WRC).
Edwards,
K. & Martin, L. 1995. A Methodology for Surveying Domestic Water
Consumption. Journal of The Chartered Institution of Water and Environmental
Management. October 1995 (9):477-488.
Herbert,
Alicia & Kempson, Elaine. 1995. Water Debt and Disconnection. London:
Policy Studies Institute.
Institution
of Civil Engineers. 1980. Water Resources: A Changing Strategy? Proceedings of
the Conference held in London. 2-5 October 1979. London: Institution of Civil
Engineers.
Institution
of Civil Engineers and Scientists and the Institution of Civil Engineers. 1977.
Proceedings of the One-Day Seminar on the Operational Aspects of the Drought of
1975-76. 29 March 1977. London: The Chameleon Press Limited.
National
Consumer Council. 1993. Paying the Price: a consumer view of water, gas,
electricity and telephone regulation. London: HMSO.
National
Consumer Council. 1997. Consumers and the Environment: Can Consumers Save the
Planet? September 1997. London: The National Consumer Council.
Office
of Water Services (OFWAT). 1994. Future Levels of Demand and Supply for Water.
OFWAT Occasional Paper 1. November 1994. Birmingham: OFWAT.
Office
of Water Services (OFWAT). 1996. Report on Recent Patterns of Demand for Water
in England and Wales. May 1996. Birmingham: OFWAT.
Rees,
Judith Anne. 1969. Industrial Demand for Water: A Study of South East England.
London: London School of Economics and Political Science.
Solley,
Wayne B., Pierce, Robert B., & Perlman, Howard A. 1998. Estimated Use of
Water in the United States in 1995. U.S. Department of the Interior. US
Geological Society. Denver, CO: USGS.
Stern,
Paul C., et al. 1997. Environmentally Significant Consumption Research
Directions. Washington, D.C.: National Academy Press.
Straughan,
Robert D. & Roberts, James A. 1999. Environmental segmentation
alternatives: a look at green consumer behavior in the new millennium. Journal of
Consumer Marketing. 16(6): 558-575.
Water
Services Assocation (WSA). 1993. Water Metering Trials – Final Report.
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[1] These six major groups of factors include: 1) expansion of irrigation systems and increases in energy development; 2) development of center-pivot irrigation systems and cheap, available and plentiful ground-water resources; 3) higher energy prices in the 1970s, large drawdown in ground-water levels, improved application techniques in the 1980s, increased competition for water, downturn in the farm economy; 4) transition from water-supply management to water-demand management; 5) new technologies in the industrial sector that require less water, improved plant efficiencies, increased water recycling, higher energy prices, and changes in law and regulations to reduce the discharge of pollutants; and 6) enhanced awareness by the general public to water resources and active conservation programs in many States. (Solley, Pierce & Perlman, 1998)
[2] The results were: affluent greens, 35%; recyclers, 36%; careful spenders, 57%; young greens, 41%; and sceptics, 3%. (NCC, 1997)
[3] Personal communication with Howard Perlman, USGS. 10 July 2000.
[4] Personal correspondence with Sue Craddock at Thames Water, report on Demand Forecasting
Methodology.