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Question

Difficulty: HardEvaluating Plans, Strategies, and Useful Information

To reduce municipal water consumption during severe dry spells, the city of Oakhaven plans to install smart water meters for all residential customers and charge a steep surge tariff whenever an individual household's weekly water usage exceeds a baseline threshold. The city council projects that this financial disincentive will prompt residents to curb non-essential outdoor watering, thereby lowering total municipal water demand by 20 percent over the next summer. Which of the following would it be most useful to determine in evaluating whether the city council's plan will achieve its intended goal?

  1. A
    Whether installing the smart water meters will require the municipal utility to incur administrative expenses that exceed initial budget projections.
  2. B
    Whether neighboring municipalities have successfully reduced their overall water consumption by offering rebates for water-efficient appliances.
  3. Whether a substantial proportion of the residential properties that regularly exceed the baseline threshold are rented units whose water bills are paid by property owners rather than by occupants.Answer
  4. D
    Whether residents whose weekly water usage is currently below the baseline threshold will feel motivated to lower their consumption even further.
  5. E
    Whether local environmental organizations endorse the city council's reliance on monetary penalties rather than voluntary conservation campaigns.

Answer

Whether a substantial proportion of the residential properties that regularly exceed the baseline threshold are rented units whose water bills are paid by property owners rather than by occupants.
The plan relies on a financial disincentive (the surge tariff) to compel high-volume water users to reduce their consumption. For this mechanism to work, the individuals making daily water-use decisions must directly experience the financial penalty. Determining whether high-usage properties are occupied by renters whose water bills are paid by landlords directly tests this assumption. If landlords pay the bill, tenants face no price signal, neutralizing the tariff and causing the plan to fail.

Step-by-Step Solution

1
Identify the plan's specific goal and proposed causal mechanism.
Goal: Lower total municipal water demand by 20%. Mechanism: Financial surge tariffs on excessive usage will disincentivize residents from overusing water.
Evaluating a plan requires testing whether the causal chain connecting the proposed action to the intended outcome is logically sound.
2
Formulate a Variance Test to identify critical unstated assumptions.
Determine whether the financial disincentive actually reaches the individuals controlling the water consumption.
If landlords pay the utility bills, tenants using the water face no financial penalty and will not alter their consumption habits, breaking the plan's causal chain.
3
Evaluate the two opposite answers to the key parameter.
If YES (most high-usage units are tenant-occupied with landlord-paid bills), the plan fails. If NO (occupants pay their own bills), the plan is far more likely to succeed.
A question whose opposite answers directly determine the success or failure of the plan identifies the most useful information for evaluation.

Key Concept

Evaluating Plans: Variance Test & Causal Linkages
Estimated Time:2m 0s
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Topics

Evaluating Plans, Strategies, and Useful Information

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