Household response to environmental incentives for rain garden adoption

Abstract

A decentralized approach to encourage the voluntary adoption of household stormwater management practices is increasingly needed to mitigate urban runoff and to comply with more stringent water quality regulations. We analyze the household response to a hypothetical rebate program to incentivize rain garden adoption using household survey data from the Baltimore-Washington corridor. We asked respondents whether the household would adopt a rain garden without a rebate or when offered a randomly assigned rebate. An interval-data model is used to estimate household demand on the willingness to pay (WTP) for a rain garden as a function of demographic factors, gardening activities, environmental attitudes, and other household characteristics. Estimation results indicate that mean WTP for a rain garden in our sample population is approximately 6.72 per square foot, corresponding to almost three-fourths of the installation cost. The expected adoption rate more than tripled when comparing no rebate versus a government rebate set at one-third of the installation cost, indicating that economic incentives matter. There is substantial heterogeneity in the WTP among households. Higher levels of WTP are estimated for households with higher environmental concern for the Chesapeake Bay and local streams, garden experience, higher income, and non-senior citizen adults. We conclude that a cost-share rebate approach is likely to significantly affect household adoption decisions, and the partial contributions paid by households can assist with lowering the substantial compliance costs for local governments to meet water quality requirements.