Subsidies for Succulents: Evaluating the Las Vegas Cash-for-Grass Rebate Program

I estimate the water savings, energy use externalities, and property value effects of a Las Vegas area water conservation program that subsidizes conversions of lawn to desert landscape. Using event studies and panel fixed-effects models, I find that the average conversion reduces water use by 19%-21%, may increase energy use by 3%, and increases property values by about 1%. In addition, my results demonstrate that there is little erosion in water savings, that water savings are inversely proportional to annual program take-up, that participants with high preconversion water demand save the most water, and that a 4% price increase would have achieved equivalent savings. I find little evidence of property value spillovers to neighboring properties. The program saves water at an annual rate of $2.65/kgal to $3.31/kgal and generates net benefits of between $2.35 and $2.88 per square foot of desert landscape converted.

Automated summary

This study assessed the effectiveness of a water conservation program in the Las Vegas area, finding that on average conversions can reduce water usage but may increase energy consumption and increase property values. Results showed that water savings are inversely proportional to the annual program take-up rate, and participants with high pre-conversion water demand save the most water.