Water Conservation Tools for Municipal Systems: Overview of Costs and Water Savings

1. Water Conservation Tools for Municipal Systems: Overview of Costs and Water Savings Damian C. Adams Assistant Professor Department of Agricultural Economics Oklahoma State University Presentation to the Board of City Commissioners City of Shawnee March 1, 2010

2. Background • Water supply problems in Southern US • No longer an urban city or ‘dry state’ problem • Droughts, population growth, diminishing access, other persistent factors (Dziegielewski and Kiefer, 2008) • Rural and small municipal water utilities considering: • Price-based conservation (PC) measures that encourage conservation through consumers’ water bills • Non-price conservation (NPC) measures that reduce water demand or reduce waste (Olmsted and Stavins, 2008) • Select measures that fit community needs

3. Price-based conservation Overview and expected changes in water use

4. Price-based conservation Weak price signal, incentive to conserve Strong price signal, incentive to conserve

5. Examples of price-based conservation

6. Price-based conservation: Concerns about effects • Effects differ by user characteristics • Low-income users experience higher bills, but lower adaptation • High-water-use businesses disproportionately impacted • Response to prices uncertain • Nationally, expect a 1-3% reduction in water use from a 10% increase in marginal prices; 4-8% in some areas • Effects can be influenced by non-price conservation, awareness/education campaigns, and other factors • Impacts on municipal revenue/budget • Adequate re-investment in infrastructure

7. Shawnee’s rate structure Average use?

8. Shawnee’s rate structure • Brunt of the rate increase on initial (first 1,000 gallons) use • Little savings from reducing use • Reduce indoor use by 20%, save <$5 per month • Rate structure not steep, no strong steps • Likely very little induced water conservation, but stable revenues for infrastructure improvement

9. Nonprice conservation Relative costs and water savings

10. Non-price conservation • Smart meters • Water budgets/audits • Mandatory or voluntary watering restrictions • Education/awareness • Leak detection • Incentives for efficient irrigation systems • Xeriscaping • Rebates/retrofits Allow alternative pricing approaches

11. Use of non-price conservation – Southern U.S. Adams et al. (2010)

12. Example costs and savings: Cary, NC AWWA (2008)

13. Typical water savings – plumbing fixtures GDS Water Associates (2002) * Assuming $5.00/kgal and 2.7 people/household; excluding initial investment

14. Residential – single family (suburban) GDS Water Associates (2002)

15. Residential – multifamily (suburban) GDS Water Associates (2002)

16. Commercial GDS Water Associates (2002)

17. Conservation versus supply expansion Cooley et al. (2007)

18. Conclusion • Variety of conservation tools available to utilities and water users • Consider relevant factors • Costs • Technical difficulties • Adoption/receptivity • Offsetting behavior, demand hardening • Conservation is (relatively) cheap • Find mix of price-based and non-price conservation that fits community needs

19. Thank you Damian C. Adams 316 Ag Hall, Stillwater, OK 74074 405-744-6172 damian.adams@okstate.edu