UMD research estimates the dollar value of hurdles to homeowners enrolling in cost-sharing programs and shows how much they reduce incentives.
Image Credit: Rain Dog Designs
Rainwater flowing from lawns, roofs and paved surfaces not only causes flooding and erosion, but it washes lawn chemicals and mud into local streams that feed larger water bodies like the Chesapeake Bay. Many local governments and private environmental organizations offer cost-sharing programs, which pay homeowners a percentage of the costs to install rain gardens, rain barrels and conservation landscaping designed to retain or absorb stormwater.
But participation in these programs is generally low, and previous studies have shown that the time and effort required of a homeowner to sign up can be a barrier to enrollment. Now a University of Maryland environmental economist and his colleagues have put a dollar value on those enrollment barriers, estimating how much the various features of a cost-share program reduce the incentive of that program to a homeowner. The study, which was published in the American Journal of Agricultural Economics, provides a model decision makers can use to design better incentive programs and increase enrollment.
“When you have these incentive programs, some of the cost-sharing incentive is dissipated through what we call transaction costs, things such as the effort it takes to complete the application process, find a contractor, receive a rebate payment, or obtain final inspections, and such,” said David Newburn, an associate professor in the Department of Agricultural and Resource Economics at UMD and co-author of the study. “We decompose the whole enrollment process into discrete parts and quantify each barrier to show its impact on the incentive.”
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