Author: Gordon Ji
Degree: Ph.D. in Economics
Advisor: Dr. Eugenio Miravete
Institution: University of Texas at Austin
Year: 2025-2026

As climate change amplifies more volatile weather patterns, water utilities face increasing difficulty in simultaneously ensuring revenue feasibility, promoting water conservation, and protecting low-income consumers. This paper tests and concludes that price alone cannot achieve these competing policy goals under different weather patterns. Using granular household data from Austin, TX, and a structural demand model enhanced with satellite imagery-derived vegetation index, I find that because high-water users exist across all income levels, traditional tiered pricing doesn’t work as intended. Furthermore, higher-income households—who are both weather-sensitive and surprisingly price-elastic—complicate the utility's ability to achieve its distributional objectives while meeting the conservation target. When high-demand conditions (e.g., drought) make conservation measures necessary, low-income families experience an average welfare loss of $74 per month. This highlights the necessity of complementary policies to achieve distributional goals when demand increases. For example, a program encouraging households to convert 30% of their lawns to water-saving landscapes (zeroscaping/xeriscaping) could generate approximately $70 per month in welfare for the lowest-income families, nearly offsetting the financial burden imposed by conservation policies during droughts.

├── pre_analysis/               # Data cleaning, GIS data, and NDVI
├── demand/                     # Demand Estimation
├── price_elasticity/           # Code to generate price elasticity
├── preliminary_intuition/      # Code related to constructing preliminary intuition of the optimal Ramsey price
├── counterfactual_temp/        # Counterfactual analysis that's not been used
├── counterfactual_ramsey/      # Counterfactual analysis of Ramsey Pricing Model
├── other_app_info/             # Folders contain other application info
├── gordonji_jmp_2026.pdf       # Job Market Paper (Last edited June 2025)
└── README.md                   # Project overview (this file)

This repository accompanies my dissertation research on the intersection of utility pricing, climate variability, and economic welfare. It includes:

• A structural DCC model of household water demand
• Counterfactual simulations of Ramsey pricing under different weather conditions
• Estimation of the shadow cost of policy constraint under counterfactual weather conditions, especially for the lowest income stratum
• The welfare benefit from the additional policies like Zeroscaping towards the lowest income stratum

The data comes from Austin Water's monthly transaction records.
Due to privacy constraints, raw data are not publicly included.

This project is licensed under the MIT License – see the LICENSE file for details.

If you have questions or want to collaborate, feel free to reach out:
📧 [[email protected]], [[email protected]]