Increasing global water shortage is enhancing the need for water management policies, such as water demand policies. This study presents the main water demand-side management policies implemented in Israel, designed to reduce water demand in the urban sector, and subsequently examines their effectiveness by an econometric model, based on residential water consumption data. The main findings indicate that, among the economic policy tools, a smooth increase of water tariffs was not effective, while a drought surcharge led to a significant reduction in residential water demand. Educational policy tools also significantly reduced water demand, though the daily report on the Kinneret water level (a long-term educational tool) had a larger effect on residential water consumption than awareness campaigns (a short-term educational tool). These results may assist policymakers to make informed decisions regarding the implementation of such policy tools.