How Effective Are Building Codes at Reducing Residential Water Use? Evidence From California Billing Data

ABSTRACT This study examines the impact of residential water‐efficiency standards on household water consumption, utilizing billing data from California. I examine both the short‐ and long‐term impacts of the California Green Building Standards Code (CALGreen), comparing homes constructed just before and after its implementation in 2010. The findings show that, on average, CALGreen homes use 11.7% less water than comparable pre‐code homes, with savings persisting over time at approximately 10.9%. Notably, engineering‐based (ex ante) estimates of water savings are nearly twice as large as the realized reductions, likely reflecting the “offsetting behavior” effect. The analysis further reveals that most water savings occur during warmer months when outdoor water use peaks. In addition, CALGreen homes exhibit lower sensitivity to temperature fluctuations, with smaller increases in use during hotter months and smaller reductions during cooler months. Finally, when accounting for compliance costs and the opportunity cost of water, the results suggest that CALGreen policy passes a cost‐effectiveness test. These findings highlight the effectiveness of building codes as a durable policy tool for achieving long‐term water conservation in fast‐growing, semi‐arid regions.