From the National Geographic (Sandra Postel):
A few years ago, the town of Westminster, Colorado, just north of Denver, came eye-to-eye with an issue many water-conserving cities face when a resident posed this question at a public meeting, “Why do you ask me to conserve, and then raise my rates?”
With droughts dotting the country and a growing number of areas facing water shortages in the years ahead, conservation is a core strategy for meeting present and future water demands.
Yet water utilities often find themselves in a conundrum: how to encourage households to reduce their water use without (1) losing vital revenue to maintain their water systems or (2) facing a public outcry over the raising of water rates.
Much of the money needed to expand and upgrade water infrastructure – from pipes and pumps to treatment plants – comes from selling water. By some estimates, fixing and expanding the nation’s water infrastructure will require at least $1 trillion over the next 25 years.
It seems like a catch-22. Rivers are running dry and groundwater is being depleted, so conservation is an imperative. But conservation means a drop in the volume of water sold, which can cause a utility’s revenue to drop.
The obvious answer is to lift water rates, the price charged per gallon used. But that’s not always easy. Even though U.S. residents typically pay a lot less for water than they do for their cell phones or cable television, raising water rates by even a small amount can risk a public backlash…
So, to provide a satisfactory answer to the customer’s question at the public meeting, two of Westminster’s analysts, Stuart Feinglas and Christine Gray, along with water conservation consultant Peter Mayer, dug in and undertook some research. They presented their results last fall at the WaterSmart Innovations conference in Las Vegas, as well as in a report published by the Chicago-based Alliance for Water Efficiency.
The results were illuminating — and a resounding endorsement of the economic benefits of water conservation.
Between 1980 and 2010, water use person in Westminster had dropped from 180 gallons per person per day to 149 gallons, a decline of 21 percent.
The staff attribute the drop in part to the national plumbing codes passed in 1992, which reduced the water used by new toilets, faucets and showerheads, and effectively built conservation into new homes and offices. The utility’s own conservation efforts also played an important role. Inclining block and seasonal water rate structures, for example, motivated conservation and discouraged high water use at peak times, such as hot summer days.
The research team then asked, what would water rates be today if that 21 percent reduction in per capita water use hadn’t occurred?
The answer: without conservation, water rates would have nearly doubled.
That’s because the city would have had to find and deliver an additional 7,295 acre-feet (2.38 million gallons) of water a day, necessitating a capital investment of nearly $219 million.
It would also have had to satisfy a much higher peak demand. Back in 1980, before the conservation efforts began, peak water use was 3 times higher than average use. Conservation measures, including effective pricing, brought that ratio down to 2 to 1.
Building the additional water treatment and other infrastructure to meet that higher peak demand would have required an additional capital investment of $130 million.
Since water used indoors for showering, flushing toilets, other uses then goes to a wastewater treatment plant, using less indoors means less water to treat. Conservation saved the city an additional $20 million in avoided capital costs for wastewater treatment.
Adding in avoided debt financing expenses, the conservation program saved Westminster a total of $591,850,000 in new infrastructure costs. It also reduced water and wastewater operating costs by more than $1.2 million per year.
Bottom line: single family rates and fees in 2012 would have been 91 percent higher without conservation than they were after all the conservation efforts– $1,251 per household versus $655.
More conservation coverage here.