Do Water-Efficiency Building Codes Reduce Household Water Use?

Nemati (2026) asks whether water-efficiency building codes actually reduce household water use once homes are occupied. He examines monthly residential water billing records from two large water districts in Riverside County, California, linked to property characteristics and weather data. The study compares homes built just before and just after the California Green Building Standards Code (CALGreen) took effect. Nemati finds that homes built under CALGreen use about 11–12 percent less water than comparable pre-code homes, roughly 38–42 fewer gallons per day. The reductions persist over time and are largest during hot summer months, when outdoor irrigation is highest.

Why This Article Was Selected for The Policy Scientist

Nemati (2026) addresses an increasingly important policy question: whether building codes can deliver measurable reductions in residential water demand in water-scarce regions. As population growth and climate pressures intensify across the American Southwest and similar semi-arid regions worldwide, policies that embed conservation directly into the built environment are gaining attention. This makes the topic timely. Nemati has contributed repeatedly to the empirical literature on water demand and conservation policy, and this study extends that body of work by providing rare ex post evidence on building-code effectiveness. The billing data linked to parcel characteristics and weather conditions are unusually rich and well suited to this question. The findings likely generalize to other rapidly growing, water-stressed jurisdictions with similar housing and climate conditions.

Full Citation and Link to Article

Nemati, M. (2026). How effective are building codes at reducing residential water use? Evidence from California billing data. Journal of Policy Analysis and Management, 45(2), e70089. https://doi.org/10.1002/pam.70089 

Central Research Question

This study evaluates whether residential building codes designed to improve water efficiency actually reduce household water consumption once homes are occupied. Specifically, Nemati examines the impact of California’s Green Building Standards Code (CALGreen), which introduced mandatory water-efficiency requirements for newly constructed homes beginning in 2011. The central question is whether these regulations meaningfully reduce residential water use relative to comparable homes built immediately before the policy took effect. The study also investigates whether any reductions persist over time, whether they vary by season or temperature conditions, and whether the realized reductions align with the engineering projections that originally justified the policy. In addition, the paper assesses whether the policy is cost-effective once compliance costs and the opportunity cost of water are taken into account. The broader objective is to determine whether embedding efficiency standards into the built environment can serve as a durable policy tool for managing water demand in rapidly growing, water-scarce regions.

Previous Literature

The paper situates itself within a growing literature examining demand-side water conservation policies. Prior research has focused primarily on behavioral interventions such as conservation pricing, rebate programs for efficient appliances, water-use restrictions, and informational campaigns. These studies generally find that water demand responds to prices and policy incentives, though the magnitude of the response varies across households and contexts. In contrast, relatively little empirical work has examined building codes as a water conservation instrument. Much of the existing evidence concerning building efficiency policies comes from the energy sector, where stricter building codes have been associated with reductions in electricity and natural gas consumption. However, a recurring finding in that literature is the gap between ex ante engineering estimates of savings and ex post realized reductions in energy use, partly due to behavioral responses that offset technological gains.

In the water policy literature, most estimates of the potential benefits of building codes rely on engineering projections rather than direct measurement of realized water consumption. These projections assume that installing more efficient fixtures will translate proportionally into lower water use. Yet the possibility that households may change their behavior—for example, by taking longer showers or increasing irrigation—raises questions about whether those projections accurately reflect real-world outcomes. Nemati’s study contributes to this literature by providing one of the first ex post empirical evaluations of water-efficiency building codes using household-level billing data. By directly measuring water consumption after homes are built and occupied, the paper tests whether engineering assumptions about conservation outcomes hold in practice.

Data

The analysis relies on a detailed administrative dataset combining monthly water billing records, housing characteristics, and weather data. The billing data were obtained from two major water agencies in Riverside County, California: the Eastern Municipal Water District and the Elsinore Valley Municipal Water District. Together, these agencies serve a large portion of the county’s population and cover a rapidly growing region in Southern California characterized by high temperatures and relatively low precipitation. The dataset includes monthly water consumption and expenditures for all single-family residential customers between 2013 and 2019.

These billing records are matched to property-level information obtained from county tax assessment data. The property dataset includes characteristics such as the year the home was built, the number of bedrooms and bathrooms, total square footage, number of stories, and the presence of a swimming pool. The year of the final inspection is used to determine whether a home was constructed under CALGreen requirements. Weather data are also incorporated using the PRISM climate dataset, which provides daily temperature information at a fine geographic resolution. These weather variables allow the analysis to control for seasonal variation and to examine how water demand responds to temperature fluctuations.

To isolate the impact of the building code, the study focuses on homes constructed shortly before and shortly after CALGreen took effect. The sample includes homes built in 2009 and 2010 (pre-CALGreen) and homes built in 2012 and 2013 (post-CALGreen). Homes built during the transition year are excluded to avoid ambiguity regarding which regulatory regime applied.

Methods

The empirical analysis compares water consumption between homes constructed before and after the implementation of CALGreen while controlling for housing characteristics, neighborhood attributes, and time-varying factors. The primary statistical approach relies on regression models with fixed effects. Census tract fixed effects control for unobserved neighborhood characteristics that might influence water use, while month-by-year fixed effects account for seasonal patterns and broader time trends. Additional controls include structural characteristics of the homes, such as size, number of bedrooms and bathrooms, and the presence of pools.

The analysis is conducted using several model specifications. The baseline model estimates the average difference in water use between CALGreen and non-CALGreen homes. An alternative specification introduces census tract-by-year fixed effects to capture local trends that may vary across neighborhoods over time. The study also includes robustness checks using log-transformed consumption measures and separate regressions for each water agency.

To examine dynamic effects, the paper conducts an event-study analysis that estimates water consumption differences by the year in which a home was built. This approach helps determine whether the observed reductions emerge only after the policy takes effect and whether there are any pre-existing trends that could confound the results. Additional analyses examine heterogeneity in the policy’s impact across seasons and temperature conditions, as well as the responsiveness of water demand to cooling and heating degree days.

Findings/Size Effects

The results indicate that homes built under CALGreen consume significantly less water than comparable homes constructed before the policy took effect. In the short run, the estimated reduction is approximately 44 gallons per day per household, representing an 11.7 percent decline relative to pre-code homes. When the analysis incorporates the full sample period, the estimated reduction remains similar in magnitude, at roughly 39 gallons per day, or about a 10.9 percent decrease. These reductions persist over time, suggesting that the conservation effects are not simply due to the novelty of new homes.

The findings also reveal that the realized water savings are substantially smaller than engineering projections. CALGreen was expected to reduce residential water use by approximately 20 percent relative to prior standards. The empirical results therefore suggest that the realized savings are roughly half of what engineering estimates predicted. This gap between projected and realized savings mirrors patterns documented in the energy-efficiency literature.

Seasonal analysis shows that the policy’s effects are strongest during the warmer months when outdoor irrigation is highest. During the summer, CALGreen homes reduce water use by roughly 21 to 25 additional gallons per day compared with non-CALGreen homes. Monthly estimates indicate that the largest reductions occur in July, when consumption falls by roughly 60 gallons per day relative to comparable pre-code homes. In contrast, the smallest reductions occur in winter months when outdoor water use is minimal.

Additional analysis suggests that homes built under CALGreen respond differently to temperature variation. Water consumption increases with hotter weather for all households, but the increase is smaller for homes constructed under the building code. This pattern likely reflects the requirement that new homes install smart irrigation controllers that adjust watering schedules based on weather conditions.

The study also evaluates the financial implications of the policy. CALGreen homes save an average of about $3 per month on their water bills, representing roughly a 7 percent reduction in water expenditures. However, the upfront costs associated with installing efficient fixtures and irrigation systems imply a relatively long payback period from private savings alone. When the opportunity cost of water scarcity is incorporated, the policy appears more cost-effective relative to other conservation programs.

Conclusion

The analysis concludes that building codes can produce measurable and persistent reductions in residential water consumption. Homes built under California’s CALGreen standards use approximately 10 to 12 percent less water than comparable homes built just before the policy took effect. Although these savings are smaller than engineering projections, they remain substantial and durable. The results suggest that embedding efficiency requirements directly into building design can generate long-term reductions in water demand, particularly in regions facing rapid population growth and water scarcity.

The findings also highlight the importance of evaluating conservation policies using real-world data rather than relying solely on engineering projections. Behavioral responses can offset technological improvements, resulting in smaller realized savings than anticipated. Nevertheless, by reducing outdoor irrigation demand and smoothing peak water use during hot periods, building codes may contribute to improved water system reliability. As climate change and population growth place increasing pressure on water resources, policies that integrate conservation into the built environment are likely to play a growing role in water management strategies.