Carrot or stick: what motivates urban water consumption? Evidence from Southern California

California has experienced one of the most intense and prolonged droughts in its history in the last decade, prompting the state government to undertake a series of policy responses. This paper compares the impact of the 2015 urban water-use reduction mandate with respect to pre-policy voluntary conservation efforts and post-policy water consumption trends by examining utility-level water demand dynamics of the Metropolitan Water District in Southern California. The findings overall indicate that despite voluntary measures resulting in a gradual decline in urban water-use, the introduction of the regulatory stick achieved swift reduction targets that remained even after removal of the mandatory policy.