One topic that continues to percolate in both the comments to our forum and in the broader conversation about water concerns the possible use of wastewater, treated to extremely high standards, that would be piped back to San Diego’s water reservoirs. There it would be blended with other freshwater supplies before being ultimately drawn down, treated again, and then distributed throughout the city for potable reuse.
Fair disclosure: My late-father, William H. Bruvold, built an academic career at U.C. Berkeley’s School of Public Health studying the public’s perceptions about reclaimed and recycled water and spent time consulting in San Diego. (For an accessible summary of some of his research on this topic see this paper from the journal Water). By looking at a myriad of surveys my father came to some conclusions. They included:
1) Science matters but isn’t determinative. Information and data about safety only moves some subgroups.
2) Information from TRUSTED sources matters a great deal. In other words, people may not feel comfortable about trying to figure out water issues or distinguishing between the effectiveness of various ways of treating water to tertiary standards but do take cues on this issue from sources which they have trusted in the past. If trusted sources say it is safe people will become much more accepting.
3) Acceptance of potable uses usually followed use of reclaimed water for non-potable purposes.
4) (A finding that is my favorite) People’s perceptions about the taste of their water is inversely correlated to their level of acceptance of reclaimed/recycled water. When people say their tap water tastes "bad" people are more reluctant to accept reclaimed and recycled water.
These findings point a ways forward and offer some important guides to advocates.
- Stop making it an either/or proposition in respect to reclaimed and recycled water.
The reality is that MANY parts of the city have limited/no experience with reclaimed water (for a map of the current areas served by reclaimed water click here. It shouldn’t be surprising that the politicians that were the MOST vocal (and successful) in opposing the last major push for non-potable reuse from areas where there was no experience with reclaimed water. A glance at the map suggests that advocates for recycled water had better be careful and hope that when this proposal actually "gets legs" sleeping giants don’t awaken, egged on by politicians who decide to ride the tiger by using the inflammatory rhetoric of toilet-to-tap.
My father might say "good luck with that." I would love to know where one of those politicians, Howard Wayne, now sits on the issue as he contemplates a City Council run. Advocates should start thinking about how to bring reclaimed water south of SR 52 in a cost effective way. Absent that, their chances of success are a great deal lower.
- Trusted sources matter. advocates need to continue to talk to them.
Proponents of recycled water have a pretty steep barrier right now. The mayor of the largest city and the editorial page of the major metro daily newspaper are strongly opposed to recycled water.
Other opinion leaders have been much more accepting but advocates need to understand that dynamic and continue to recruit AND PROMOTE individuals of prominence and trust that will endorse the indirect potable re-use of highly treated water. The mayor of San Diego, perhaps the next one, needs to be a cheerleader because, at least for the foreseeable future, he or she has by far the biggest loudspeaker.
- Stop trying to blind them with science.
People trust scientists. But they also trust celebrities, sports figures, and others. Go out and recruit a bunch of Chargers and Padres to start drinking the Orange County water which is augmented from re-purified sources. Get a panel of local doctors to endorse (and drink) recycled water.
Put some water in a bottle from Orange County (which injects treated waste water into the ground for later reuse) throw a big prominent label on it and have your supporters at the city council drink it and put in on the dais during meetings and the podium during interviews. Given the different levels of acceptance of the water by gender, go out and recruit some prominent women in the community to endorse reuse as safe and an effective way of augmenting supply.
The science, economics, and environmental findings on recycled water are very compelling. We already drink water from the lower Colorado River which has been "used" by scores of communities upstream. The technology to do this is proven safe and effective. Bogymen like trace pharmaceuticals in the supply are almost akin to debates in the 1950s about communism and fluoride.
However -- and thank goodness -- we live in a democracy and not in some despotic kingdom ruled by technocrats. The science is secondary to public opinion. PEOPLE are going to decide this issue and ultimately it is going to be a battle for their hearts (and taste buds) as much as it is going to be over their minds.
Thursday, October 29 -- 4:17 pm
I have very mixed thoughts on the Irvine Ranch Water District's household water budget scheme for pricing water that some have pointed to as a model for what San Diego should do.
First, the good points of this scheme:
- It is a major improvement on what San Diego is currently doing.
- It has the appearance of being fair and rational.
- The water budget concept gives households some idea of what is a reasonable amount of water for them to use is and the pricing structure is geared toward this concept.
- The first block of water is priced much lower at about 1/3 of what San Diego is currently charging. It is a much more sharply tiered system than San Diego has and hence encourages conservation.
- The scheme is not that hard to administratively implement in spite of comments to the contrary by San Diego officials.
Now the bad:
- The monthly base fixed fee ($7.75) per household is too high but is much better than San Diego's monthly current base fee of over $17.
- The tiered structure has five blocks which is still not quite enough.
- The price jumps of the last two blocks are too steep: The next to last block doubles the price and the final block doubles that one.
- The "labels" on these last two blocks (excessive and wasteful) are a bit Big Brotherish and you need some households to use more water at high prices to keep the cost down for the larger number of households who do conserve.
- By basing a large part of the allocation on yard size, the Irvine Ranch is effectively subsidizing fairly heavy water use by single family detached homes at the expense of apartment and condo dwellers.
- Long term, the Irvine Ranch Water District scheme will slow down a transition toward drought resistant landscaping relative to what a per what a per dwelling unit or per person (implemented via number of bedrooms) scheme would achieve.
- Larger water budgets are given to households in hotter areas which effectively subsidizes development in such areas. There is a variance procedure that is administratively complicated. It allows households to receive more water if (a) more people are documented in legally acceptable ways as living at the dwelling unit than the standard formula assumes, (b) it is documented that the house has larger amounts of vegetation than was assumed by the standard formula, (c) if medical conditions require more water (but I am not sure exactly how this would come into play), (d) being a licensed day care facility and (e) even for filling swimming pools.
-- RICHARD CARSONThursday, October 29 -- 4:17 pm
The question from the moderator:
What kinds of things could help aid water users with a switch to a tiered pricing system?
Devices and technology could certainly be deployed to help water users track their consumption during the month on a real time basis. If such devices do not currently exist, it is well within our capabilities to develop them. Water usage could then be tracked as cell phone users track their "minutes." The cost of such devices would be a one-time investment and could be amortized over time, with some sharing of costs by households, businesses, and the water authority.
Until such devices are installed, households and businesses could use their existing bills as a guideline and scale back their consumption to avoid the higher tier levels and related price points.
-- LYNN REASERThursday, October 29 -- 4:17 pm One thing that economics helps us understand is that the cost of information matters. Consumers, on the whole, balance the costs of collecting and processing data against the savings they can achieve by acting on information they obtain. When savings are relatively small (as even in the most aggressive of scenarios would be the result of water conservation) information costs better be low.
If not, then many will throw up their hands in frustration.
Thinking about information costs helps bring into focus just how far we will still need to go before to maximize the potential for pricing to drive greater conservation.
1) Water meters need to be easier to read and understand.
Most readers probably have, at best, a vague understanding about the location of their water meter. In most instances, if you want to read it get ready to hunt for a flathead screwdriver, open up a heavy covering, wipe off the mud and grime while kneeling on the ground.
Most will find that they need to do at least a couple of mathematical calculations to figure how much water they have used since they got their last bill. Given these costs, I would bet that only a small number of consumers are going to frequently try to obtain and process information about how their level of consumption is being impacted by changes in behavior. They might look at the meter to try to figure out if their sprinkler system is leaking but not to find out how much they are conserving by not shaving in the shower.
2) Bills are not easy to understand
Ideally consumers would get a bill that clearly lays out the incremental unit cost in water so they could clearly understand how much they are paying for each incremental unit of water.
Fat chance.
My bill is relatively simple (we live just outside the city of San Diego). We get useful information about how our water consumption has changed from the previous billing cycle and how it compares to our use a year ago. Yet my bill is chalk full of confusing information which doesn’t really help me understand how much I would (or would not) save if we cut back.
The city of San Diego’s water bill makes the cost of obtaining information of value much harder.
3) Most consumers don’t have good information/experience in how to cut back on use.
I did an experiment last night. It takes our family members, on average, about 2 minutes to brush our teeth and our bathroom faucet puts out about 1.25 gallons a minute.
So by turning off the faucet in the a.m. and p.m. while we brush, our family is saving 300 gallons a month. But if we cut back our landscape irrigation by just 15 seconds for each station we save nearly twice that amount.
But figuring this out took close to 25 minutes, a calculator, and reading little tiny print on my sprinkler heads. I am sure better minds than mine could have done it faster. For this landscape-engineered challenged homeowner, however, the "information cost" of such an exercise was missing a new episode of the Daily Show.
Call me a barbarian but that is a sacrifice I am not prepared to make on a regular basis.
Aligning meters and bills in a way that helps consumers (as opposed to plumbers and meter readers) will be expensive and take time.
It is going to be an incremental effort as new meters and updated bill systems are deployed. However, if we want to use price to drive down consumption that has to be the goal so that it is relatively costless for people to know how much money they can save by taking specific actions. Economics helps us understand that incentives matter ... but also helps us understand that this is only true if consumers have access to relatively cheap information on which to act.
-- ERIK BRUVOLDWednesday, October 28 -- 5:24 pm Over the long run tiered pricing with increasing prices encourages conservation by:
- (a) altering water use behavior
- (b) changing indoor appliances (e.g., low-flush toilets)
- (c) changing outdoor technologies (e.g., drip irrigation), and
- (d) switching to outdoor landscaping that requires less water.
What many households fear is that they have little knowledge about the factors that influence their water use and that as such they might be pushed into a tier where their water bills explode. The way to avoid this is to put in a pricing system with a fairly large number of tiers so that price increases gradually with the amount of water consumed.
Note that this is the opposite of what some proposed pricing structures do that have very large almost draconian price jumps for the last block of water. It is important to phase in the new rate structure over the course of several months so that households can get feedback on their water usage.
During this phase-in period it is important to give households information about their water usage. Some of this can be done by redesigning water bills to make them more user friendly.
There is also research that shows that giving households information about how much water households with similar characteristics are using can serve a valuable function. Methods exist that could give households high frequency feedback on their water usage via email or automated phone calls, including issuing warnings when water consumption was close to passing specific levels.
These smart meter methods are currently being implemented by electric utilities including San Diego Gas & Electric but they are generally viewed as not cost-effective with respect to water; in large part because the cost of water does not spike on hot days like electricity does.
-- RICHARD CARSONWednesday, October 28 -- 5:35 pm Respondent Catherine writes:
Any discussion of water pricing structures designed to change individual behavior has to look at the implications for rentals. I never see our water bill so I have no idea how much water I use or how I stack up against the average. All I know is that I’m careful about my water usage because I care about conservation. But I can’t judge how I’m doing without seeing the bill. I could be one of the worst in the neighborhood and think I’m a great some conservationist because I am one in my head.
I would guess that a lot of renters are in a similar position. We have a lot of rentals in San Diego and quite a few dilapidated rental homes with absentee landlords who do little to maintain their properties. With that, you get leaky faucets and poorly maintained, outdated irrigation systems that spill water all over the sidewalk.
If the property owner doesn’t feel the pain of wasting so much water through negligent property ownership, and the tenant has no way to measure water consumption or never feels the effects because he/she doesn’t pay the bill, it’s going to be difficult to reduce consumption.
Respondent raises valid point about rental units. Some renters of homes and apartments pay their own water bills, but in other cases, the owner pays. In cases where the rent paid includes water, individuals conserving water are often subsidizing heavier water users as the landlord may base rents mainly on the size or amenities of the unit. A major cause of this problem is the lack of water meters on individual units.
The major solution to this issue involves the installation of water meters for individual units for apartment and condominium complexes. The cost of meter installation could be subsidized by some of the water revenues devoted to conservation. Whereas this might not be feasible for some older units, where a common water heater is shared, this approach would certainly enhance the move to a more efficient use of water.
-- LYNN REASERTuesday, October 27 -- 7:57 pm
Several readers have raised issues both pro and con concerning San Diego’s base water fee for households. It is good to get a few facts on the table. San Diego’s water rates table shows a base fee of $35.18 bi-monthly or $17.59 per month.
For a household using roughly 150 gallons of water a day, which is substantially more than many two-person households living in an apartment or condo would use, their water bill in San Diego would be $17.87 for the water used plus $17.59 for the base fee which is $35.46. Thus roughly half of the water bill is for the fixed base fee. For a single person living alone, the base fee can easily be 75 percent of the water bill.
Let’s compare this to the practice in Phoenix, another city in the desert roughly San Diego’s size. (Phoenix water rates can be found here.) Phoenix’s base charge is $4.64 per month and this charge also includes roughly 150 gallons a day. Ignoring the "base" amount of water included, San Diego’s base fee is almost four times higher than that charged by Phoenix. Including the base water allocation, the comparison is even less favorable; San Diego is charging households using reasonably low amounts of water almost eight times more than Phoenix.
It is hard to justify San Diego’s large base charge on equity grounds, as the policy is highly regressive from an income perspective. It is also hard to justify in terms of encouraging water conservation as the larger the base fee the smaller the variable cost associated with using more water.
The reason for the large base fee is that the city of San Diego has large fixed costs associated with running the water system and any industry with large fixed costs would like to be able to effortlessly recover those costs. But this is true of many industries.
Can you imagine oil companies charging a large fixed fee before you filled your tank with the first gallon of gasoline? The answer of course is no, even though they have lots of pumping stations and pipelines that have to be paid for before that first gallon of gasoline reaches an automobile. Oil companies charge a high enough price for their product to be able to cover both their fixed and variable costs. To be able to do this effectively, a water agency needs to know a lot more about how sensitive water demand is to the pricing scheme used and this is something that many water agencies, including San Diego, have made little effort to learn. Part of this is understandable, the political process gets involved in setting water rates and any thought of running the water system like a business goes out the window.
San Diego, though, will never successfully make the transition onto a long term sustainable path with respect to making sure its water supply and water demand balance without a wholesale restructuring of its current system of water rates. In the long run, San Diego’s economic prospects will be enhanced by the City being known as a reliable supplier of water with the cost structure aimed at encouraging conservation, particularly since the cost of obtaining additional water is high. It would also be desirable for the city to be known for having an equitable distribution of those costs across different types of households and businesses.
-- RICHARD CARSONTuesday, October 27 -- 7:57 pm
Are We Having a Water Shortage or a Water Crisis?
It is fair to say that California is having a water crisis, but this is very different from saying that San Diego faces a water shortage. As long as there are willing sellers of water from the agricultural sector and as long as as much water as is desired can be obtained from desalination, there can never be a water shortage in sense generally accepted by economists.
All we are looking at is a situation where households and businesses will have to pay more to obtain the water they want and the price of desalination which serves as an upper bound on this cost. Further, it should be noted that this upper bound on the cost is low enough that public health would never be endangered due to the inability to afford water for drinking, food preparation, bathing, and sanitation.
California has a water crisis because the historical allocation of water has been upset by: (a) population growth in urban areas, (b) loss of water from the Colorado River in court decisions to other states, primarily Arizona, and (c) loss of water from the Sacramento River-San Francisco Bay system by court order to protect environmental resources.
Something has to give and the political will to implement a new workable water policy for California has thus far been lacking. Water should move out of low value added (from a water perspective) agriculture. But there are still legal obstacles and legislators in Sacramento continue to make it much harder to buy and sell water than is the case in some other states. The water infrastructure to transport water and protect the environment is in terrible shape. All of this makes water in urban areas more expensive than it should be.
Ultimately, though households and firms in urban areas are likely to have to pay higher prices for less water. There are more of us now and there is less low cost water to “average” in.
-RICHARD CARSON
Tuesday, October 27 -- 7:06 am
The moderator's Monday question was this:
Are we dealing with an ever-more scarce resource that we’ll have to conserve to ensure there is enough for vital business and health needs? Or are we dealing with an ever more valuable resource that we’ll simply have to pay more to import or create?
The amount of water available from the current system is going to drop. Nearly every projection about the Colorado River system forecasts that there will be significantly less water available. There is significant uncertainty about the ability of the State Water Project to deliver present volumes. At least for now, there is going to be a significant amount of fresh water delivered to the Delta for environmental reasons.
Meanwhile demand is likely to increase. Demographers still project that the state will grow by 10 million between 2010 and 2030. Much of this increase will occur in hotter, drier interior regions. Climate change is likely to put upward pressure on the demand for water from the state’s agricultural industry and will require a massive reworking of the "plumbing" of the state’s water conveyance system. The "low hanging" fruit in water conservation, especially in respect to interior uses, has been plucked.
There are only a few reasonably settled issues in the social sciences. One of them is that a shrinking supply of a good plus increased demand leads to upward pressure on prices along with efforts to decrease consumption and develop new supplies. With hiccups along the way, we are seeing all of those responses to the new water reality in region’s like San Diego where, at least on the wholesale level, water is more "market-priced." Prices are rising, conservation efforts are redoubling, and higher prices are encouraging entrepreneurs to deploy technologies like desalination to increase supply.
The biggest challenge, however, is that so much of the water in the state is NOT currently allocated by using price. Water "rights" conferred in the last century were conferred not on the basis of any bidding system but as a way of opening up land for "productive" agricultural uses.
State law prohibits approving transfers if it will lead to significant fallowing of agricultural land. While some urban areas (San Diego, Orange County, the Inland Empire) depend upon the state and federal water systems, the cities where the majority of urban Californians live (San Francisco, Los Angeles, and the East Bay have access, won by questionable means, to water outside of the state and federal systems.
The Metropolitan Water District of Southern California and its near-monopoly power over the conveyance system that serve Southern California, creates serious barriers for negotiating large-scale water transfers between the Central Valley and Southern California.
Moreover, the wide economic disparities between the affluent urban coast and the relatively impoverished agricultural interior increase the political difficulties of implementing a statewide water market. If you ever want to see people actually tar-and-feather an economist, I suggest sending one to the Central Valley and have them argue that it is more "rational" to allow water prices to float so that coastal water users can buy expensive water to irrigate ornamental landscapes while agricultural lands sit fallow and large agro-businesses with historic water rights collect a check.
While economics offers some pathways out of the sticky wicket of third party effects, transaction costs and rent-seeking, it doesn’t offer any magic bullets to get our hypothetical economist out of town unscathed.
In sum, what I see as the biggest challenge for water in California is managing through a fractured system. Most, if not all, of the 80 percent of the state’s water that has traditionally been used for agricultural uses is unlikely to be priced freely. San Francisco, Los Angeles, and the cities served by the East Bay Municipal Utility District are NOT going to give up their monopoly rights to the cheap water from the Owens and Hetch Hetchy valleys and allow this water to flow to the highest bidder.
The rest of urban California, including San Diego, which didn’t get in on damming up irreplaceable scenic landscapes in the central Sierra or laying waste to bucolic farmland, are going to see water prices "float" to achieve a more efficient use of the resource. That arrangement is not going to please San Diegans but it is the probable outcome of the policy dispute.
The bottom line? Get ready for significantly higher water prices and disparities between what we pay and the water rates enjoyed by certain other parts of the state. As Bette Davis, fasten your seatbelts, it promises to be a bumpy ride.
-- ERIK BRUVOLDMonday, October 26 -- 8:32 pm
Professor Carson made quite a statement in his opening remarks with the point that there is no water shortage in San Diego -- it’s just that we will have to pay more to get water and we’ll have to plan and collect for that.
So let’s delve into the moderator's question, which Carson's post provoked:
Are we dealing with an ever-more scarce resource that we’ll have to conserve to ensure there is enough for vital business and health needs? Or are we dealing with an ever more valuable resource that we’ll simply have to pay more to import or create?
This question asks: Is the supply of water fixed from the point of view of San Diego businesses and residents? Our willingness to pay a higher price might allow us to import or capture a larger portion of water from Northern California or the Colorado River, but that will depend on the decision makers in charge of their sources.
Higher water prices might also encourage new sources of water (e.g., desalinization or enhanced usage of "gray water.") A reduction in water usage, involving conservation, greater efficiencies, and adaptation of living styles and business models, will have to be a large part of the solution.
Now for some other questions from voiceofsandiego.org users:
Stephen Waits wrote
"All three of your panelists are spot on. Economics solves this problem. Forget regulation, which is expensive (and near impossible!) to enforce. Raise the price of water and less is consumed. That is just plain common sense. One thing is clear, any sort of "base charge" should be eliminated. Water users should pay for what they use, nothing more, nothing less. The real question is how to raise prices. I prefer a flat rate; however, I understand the draw of a tiered rate. A flat rate that's too high may make water seem expensive for low-income people. One that's too low won't discourage conservation from the biggest users. A tiered structure attempts to solve this dichotomy by artificially lowering the rate for the smallest users (i.e. low-income) and artificially raising the rate for the biggest users (hotels, office buildings, etc.). It sounds great, but is unfair!!!"
Your point about preferring a flat rate is well taken. The problem of low-income households could be addressed by granting them special subsidies. The bigger problem relates to individuals or businesses who had originally invested with the belief that water would continue to be priced at low rates. Granting them an amount of "base water usage" qualifying for a standard price with higher rates applying to large usages would ease some of the potential economic hardship and support adjustments over time.
Ian Trowbridge wrote:
"No-one has addressed the issue of commercial users versus household use and the politicization of water rates. The hospitality issue, hotels and restaurants, are major water users and use their political heft to ensure they have the cheapest water available even at the expense of individual water users. The biotechnology industry needs access to high quality water in substantial amounts. Finally, the companies producing purified products from seaweed use obscene amounts of water and certainly in the past have used their political power to obtain equally obscene cheap water. Maybe I am wrong about this and if so please set me straight."
Lobbying efforts should definitely not be a factor in determining water rates. Commercial usage actually accounts for a relatively small amount of total water consumption in San Diego County. In 2008, commercial businesses accounted for 17 percent of the county’s total water usage. Households accounted for 59% of the total, with residential landscaping consuming nearly a third of the County’s water supply last year.
George wrote:
When water agency operating expenses are drawn from water used fees, the agency has an inherent conflict-of-interest as a consequence. That's why some water districts face operating expense problems when people conserve their water use. A base charge that goes towards operating expenses provides more transparency for the consumer--they know exactly what the cost of the water itself is, and they see the operating costs separately. That's how the city of San Diego operates.
Many companies have faced this problem. The first approach should be a major effort to improve productivity and lower costs at the water agency.
Joel Price wrote:
As a residential 2 person household who has made a point to conserve, I'm frustrated. When I look back on my bill and it says I used 20 percent less than last year and my payment is 100% higher than that previous year. I can't help to think the system is flawed. Using the same reasoning that "economics solves this problem" why can't people who conserve receive breaks, credits or incentives? Should it go both ways?
This same problem has affected other commodities. For example, although many people cut back on energy (use of air conditioning, heating, and driving), many still saw their total spending on energy rise when the price of oil skyrocketed. Clearly, though, individuals who conserved more and adapted their energy consumption saw smaller increases in their total energy bills than others. To minimize the adverse impact on households, a phasing-in of higher water rates would be preferable.
-- LYNN REASERMonday, October 26 -- 6:52 pm
By RICHARD CARSONSan Diego has failed to articulate a set of general principles that lie behind how it prices water to households. As a consequence, the city has been unable to place its water supply situation on a long-term sustainable path. The nature of this failure lies in not recognizing the key features of San Diego's water supply situation.
The most important point is that there is not now nor will there be in the future a true water shortage situation in San Diego. Why? Water intensive, but low-value agriculture growing like alfalfa, cotton and rice in places like the San Joaquin and Imperial Valleys use most of California's water. Agricultural irrigation districts can sell water to urban water wholesalers like the Metropolitan Water District of Southern California (MWD). MWD in turns stands ready to sell San Diego as much water as it wants. The catch is that this "extra" water comes at a higher price. Longer-term desalination and various conservation measures are also important new additional (high-cost) water sources.
The availability of more water at a higher price establishes the first key principle: water rationing should never be any part of an intelligent water policy. The reasoning is simple. Some households whose yards would suffer under water rationing would rather pay more to obtain extra water. A responsible agency obtains this extra water and charges households more for it to ensure they are not being subsidized by households who cut back on water use.
The second key principle is that: San Diego once and for all needs to determine its stance toward entitlements to its low cost water. For instance, is this entitlement on a household basis, a per capita basis, lot-size basis, or a past-use basis?
Should developers seeking to build new homes have to pay the full cost of obtaining new sources of water or should these costs be largely passed on to existing residents in the form of higher water bills, as more and more high-cost water is averaged in with the old low-cost water? Until the entitlement issue is resolved, it is impossible to determine how to price water.
The third key principle is that San Diego needs: higher "marginal" water prices to encourage water conservation and to ensure that water demand is consistent with its supply situation.
San Diego needs an increasing block rate structure with more blocks and higher prices for those using the most water. The usual objection to increasing water prices is hurting low-income households. However, the reality is that implementing a pricing scheme designed to encourage conservation would reduce, not increase water bills of most low income households.
Much of the current water bill is a base fee, which should dramatically shrink under any pricing scheme aimed at reducing water use. Further, a generously sized first block of water should be priced fairly low because opportunities for reducing indoor water use, the dominate form of water use for low income households, are small. Reductions in water use need to come from those capable of cutting back and willing to do so rather than pay higher water bills.
-- RICHARD CARSON
Richard Carson is a professor in, and former chair of, the department of economics at the University of California San Diego. You can reach him at rcarson@weber.ucsd.edu. Sunday, October 25 -- 9:31 pm
By LYNN REASERIndulging in free or cheap water is not an inalienable right. While some might believe that long showers are essential to life, liberty and the pursuit of happiness, that view is truly a stretch. Water is a good like any other. It is a scarce resource and should be treated as such.
Solving the Problem
Three approaches exist to meet our water challenge: regulation, moral suasion and pricing.
Regulation involves rationing or limiting water consumption by restricting lawn watering, car washing, or other activities either in terms of time of day or amount. Its enforcement is often spotty, frequently putting the onus on neighbors to report violators. This is clearly an inefficient means of reducing water usage. Moral suasion relies on peoples’ belief that they "should do the right thing." While laudable, results can often by uneven and not enduring. Much of the reduction in water consumption recently experienced in San Diego reflects the impact of the recession. Once recovery resumes, habits may revert largely to their prior ways.
Pricing water to reflect its cost is a simple and straightforward solution. Households and businesses will adjust their behavior and reduce their consumption because it is in their own best interest. No policing is necessary either from neighbors or city officials. Water conservation no longer relies on people searching their social and moral conscience each time they turn on the tap.
Pricing a Scarce Resource
Economics 101 teaches that a good priced too low encourages wasteful consumption and inadequate investment in infrastructure. Water has clearly been priced this way. Is it any surprise that we have a "crisis" developing?
An optimal solution would be to price water at its marginal cost. That would clearly cost buyers of large properties with extensive lawns or agricultural interests dearly since they had made their purchases on very different assumptions. The proposal of setting "base" usage amounts related to property size and number of residents represents a compromise solution. Basic water rates would be applied to those usage rates, with progressively higher rates charged for water consumption exceeding those levels.
These tiered rates would induce major shifts in behavior, with homeowners transitioning to smaller lawns or landscapes more appropriate to San Diego’s indigenous climate. This would be an important step since about half of all domestic water consumption is used for outdoor landscaping. More efficient pricing can prevent a water "crisis."
-- LYNN REASER
Lynn Reaser is the chief economist at Point Loma Nazarene University. Thursday, October 22 -- 6:47 pm
By ERIK BRUVOLDThe data is pretty clear that water use is influenced by price. Increase the cost of water, especially in an aggressive way and with tiers, and consumption will fall.
Moreover, from an economic perspective, pricing is an efficient means to influence behavior.
To avoid costs consumers will innovate in countless ways to drive down their consumption. The costs and benefits of various investments will be weighed. No need for water cops, complex regulations, and costly information gathering when utility-maximizing consumers will react to price hikes by reducing demand.
Given that the reluctance of the city of San Diego to move toward such a pricing scheme is, to be blunt, inexplicable. Even in tax-adverse Poway tiered pricing and aggressive outreach has had a predicable effect -- water use has gone down -- especially among those households in North Poway which previously had used far more than most other residential users.
It would be sad if the city of San Diego is relying upon communitarian esprit-de-corps (and a relatively mild summer) to avoid angry protests from those homeowners with the largest lots, the most tropical landscaping and the largest water bills.
Water is a hard issue. There are deep cultural norms that cut against treating this "necessity of life" as akin to other commodities.
It is a subject area where decisions making power is often concentrated in the hands of technical experts with little appreciation (or understanding) for how markets and self-interest can lead to efficient outcomes. But in a world that where water is growing increasingly scarce, it makes little sense to search for policy solutions with one hand (even if it is an invisible one) tied behind our backs.
Erik Bruvold is the president of the National University System Institute for Policy Research. He can be reached at ebruvold@nusystem.com.Monday, October 26 -- 7:27 am
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The Game of Pricing Water in San Diego
All week, Café San Diego will be the host of a virtual panel discussion on what local water agencies should be thinking about as they set water rates, deal with a dwindling supply and plan for a sustainable future. Meet our panelists:
- Richard Carson, professor of economics at UCSD (bio)
- Lynn Reaser, chief economist, Point Loma Nazarene University (bio)
- Erik Bruvold, president, National University System Institute for Policy Research (bio)
Increase the cost of water, especially in an aggressive and with tiers and consumption will fall.
» By ERIK BRUVOLD | Oct. 22 -- 4:58 pm
Economics 101 teaches that a good priced too low encourages wasteful consumption and inadequate investment in infrastructure.
» By LYNN REASER | Oct. 22 -- 6:47 pm
Water rationing should never be any part of an intelligent water policy.
» By RICHARD CARSON | Oct. 22 -- 6:47 pm
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