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The Real Relationship Between Conservation and Rising Water Rates

By Mary Ann Dickinson

A number of articles have been published recently which report on rising water rates across the U.S., pointing fingers firmly at dropping national water demand – and the efficient fixtures and behaviors driving that drop – as the reason.

While this discussion brings much-needed attention to the infrastructure investments that are required to sustain our water systems, the focus on conservation as the primary culprit behind the increasing cost of water is inaccurate and misleading. Furthermore, this misrepresentation of the relationship between water conservation and rates is detrimental to efforts to ensure that consumers use water wisely and guarantee a long-term, reliable and affordable supply of fresh water in their communities.   

Here are three reasons why water efficiency is a smart investment for both utilities and consumers and not solely a revenue buster as is currently perceived:

  1. Water rates will rise regardless of whether water conservation occurs.  Costs to provide water service are increasing all across the country, as utilities are paying more to deliver the clean, reliable water we expect when we turn on the faucet. They are paying more to obtain new and increasingly scarce supplies, treat water with chemicals to meet evolving quality standards, maintain hundreds of miles of pipe, and purchase energy, labor and insurance to deliver billions of gallons of water to homes. Just like any business, as costs of these inputs rise, prices must rise to reflect the value of the service. Water is a vital part of our lives, yet still typically costs much less than our monthly cell phone bill. 
  2. Water efficiency has been proven to actually slow down the increases in consumer rates.  A study recently conducted by the City of Westminster, Colorado examined the impact of their conservation programs on long-term water prices, and made a startling discovery. The study found that thanks to investments in water efficiency programs since 1980 Westminster residents and businesses had saved 80% in tap fees and 91% in rates compared to what they would have been without those water conservation programs.

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  3. Efficiency is often the cheapest source of new supply and can help avoid the expensive costs of adding new storage or treatment capacity. In water-scarce as well as water-rich regions, overall demand for water is increasing due to population growth, even with the drop in per capita demand. Every gallon saved is water that does not have to be pumped, treated and delivered – and the saved water can then be allocated elsewhere to accommodate new growth. In fact, the Alliance for Water Efficiency determined that the more efficient toilets mandated by the Energy Policy Act of 1992 have already saved the nation 18.2 trillion gallons – enough to supply the cities of Los Angeles, New York and Chicago for 20 years. Furthermore, water efficiency helps reduce the need for excess withdrawals, thus protecting fragile watersheds, maintaining water quality, and increasing our resiliency to climate change.

 

Consumer rates are going up regardless of conservation, and dialing back water efficiency investments because we fear revenue shortfalls will only drive customer rates higher in the long run to meet the increased demand.  Utilities that embrace efficiency as a way to better serve customers are utilities that will best adapt and thrive, because it minimizes costs in the long-term and maximizes benefits from smarter water services.

Part of the solution to the revenue shortfall issue currently being experienced involves adopting pricing models that not only finance water service, but finance sustainable water service.  It is better to deal with declining demand by designing water rates that still encourage consumers to use water wisely while collecting sufficient revenue to cover all necessary utility costs and keep the finances stable.  That is not an impossible assignment.  Utilities now have free resources at their disposal to manage the potential damaging effects of revenue shortfalls, as well as innovative pricing models that can create reliable revenue streams while also providing an efficient pricing signal to consumers.

Using water wisely should not be the enemy of financial stability.    To combat the existing rhetoric that “water conservation makes rates rise” water utilities must openly acknowledge the benefits of water efficiency, the invaluable service that water utilities provide, and the value of that service to our communities nationwide.  It is time to connect these dots.

MAD-Headshot2Mary Ann Dickinson is the President and CEO of the Alliance for Water Efficiency, a non-profit organization dedicated to promoting the efficient and sustainable use of water in the United States and Canada.  Based in Chicago, the Alliance works with nearly 400 water utilities, water conservation professionals in business and industry, planners, regulators, and consumers.  

Comments

  1. Graham Mann
    Uk
    October 9, 2014, 10:31 am

    Great article Mary, Oh so true,
    It mirrors what is happening in the UK

  2. Nikita Sharma
    India
    October 7, 2014, 8:13 am

    Mary you have explained very beautifully and in an easy manner how the rates of water and conservation are related to each other. But if we, on our individual basis start to contribute our part in water conservation we can achieve a good level. while going through another blog http://waterconsumer.org/water-conservation.php I come to know that saving water in our daily routine is so much easy. I am gonna start my bit today itself.

  3. Greg Chick
    United States
    October 6, 2014, 10:54 pm

    Water has been sold below the cost of sustainability for decades. If this was not true, we would have no issues today with water. Leadership has not lead in a sustainable way or we would not be in a catch up position. I am told of decaying systems, why was this not an ongoing expense and such an ongoing responsibility and action? “We could not afford it” what ever the cost it could have been added to water bills long ago. As a result water would have cost more! as such waste would have limited it’s self! Do we need laws to limit cash from being wasted? no, that is my point. As for price going up, it needs to go up to catch up to reality , not to compensate for conservation. Conservation reduces the cost of water delivery, any other such spin is a lie.

  4. Fred L Curry
    United States
    October 6, 2014, 3:09 pm

    Customers don’t pay rates. They pay bills. As she points out, bills go down when people conserve.

    Charging a fixed amount to cover fixed costs and not including fixed costs in quantity rates would solve this problem. If suppliers want to charge more to encourage conservation, they should institute block rates.

    It is not simple, but it can be done.

  5. Gary Lynch
    Downey, CA
    October 6, 2014, 11:02 am

    Mary Ann has the story right, but it is so difficult to communicate to the public.