Several years ago a friend of mine accepted a position with an old and large association that had not kept up with the times, especially as far as technology was concerned. The problem was exacerbated because many of the staff members had been at their jobs for 20 or more years. And because of this, some office tasks and operations had changed little, if at all, in all those years.
His job was to make changes: Bring them into the 21st century. Unfortunately, the task proved to be difficult. Eventually, one of the staffers who felt sympathy for my friend pulled him aside and said, “You have to realize, the association is like an old ocean liner in the sea. It moves slowly and changes direction even slower.”
Many people, businesses and organizations can be compared to that association. And this is true as well for some local water and sewer departments, especially when it comes to dealing with water conservation, water efficiency and specifically water and sewer charges.
Although the writing has been on the wall for years, many of us are just coming to terms with the fact that water supplies in many parts of the country are dwindling, water infrastructure problems can no longer be “bandaged over” and many water departments are charging their customers entirely too little to cover the costs of finding water, pumping it, delivering it, carrying it away from homes and facilities for treatment or disposal and maintaining water infrastructure.
The critical issue
At the heart of the problem is the fact that water is the “product” that water departments sell. In the strictest sense, a water department asking customers to restrict their water use is like a cell phone company asking cell phone users to restrict their phone use — the fewer calls made, the less money the phone companies are making. For many water departments, the less water is used, the less money they have coming in and the harder it will be for them to improve infrastructure and meet their own costs, let alone make any possible profits.
However, some water departments that have actively worked with their customers to conserve water are now discovering that as water consumption declines, infrastructure maintenance needs — and, therefore operating costs — decline as well. Further, some departments are finding that, contrary to what they anticipated a few years back, their water delivery infrastructure can now comfortably meet customer demand.
In addition, with customers using water more efficiently and responsibly, some water departments are finding that supplies might last 10 or more years longer than anticipated, essentially giving the “product” these departments sell an extended lease on life.
The water charges challenge
A core issue for many water departments is that the amount charged for water has little if anything to do with supply and demand. And underpricing water, which is happening throughout the country, tells customers, “Don’t worry about water, supplies are plentiful, use as much as you want.”
A perfect example of this is in Hollister, Calif. This small agricultural town of about 35,000 inhabitants had not raised water rates in more than a decade. While the community had dealt with droughts, invariably they were viewed as temporary situations. Historically, little emphasis was placed on serious, long-term water conservation.
By 2004, water problems reached a boiling point. It was costing the city far more to deliver water than it was charging residents. To cover costs, the city was pulling money from other departments and other areas of the budget, something that could go on for only so long until something had to give.
City leaders told residents that they simply could no longer keep the water flowing and asked for a 60 percent increase in water rates. The average business customer, including water-intensive businesses, such as laundromats and carwashes, could expect a 26 percent rate hike. As anticipated, the rate increase was viewed as an unwelcome jolt.
Treating water as a real product
Communities around the country must treat water as a real “product” and base charges on supply and demand to help spur water conservation and efficiency. Simply asking consumers to cut back consumption will likely not work.
Case in point: In 2007, residents of San Diego County were asked to scale back their water use by 20 gallons per day, a relatively small amount for the average household, which, in some cases, uses about 70 gallons of water per day per person. County administrators thought it would not be a sizable burden to residents. However, what they did not expect was that residents essentially ignored the request and some used more water instead of less.
When voluntary measures do not pan out, most water departments impose mandatory limits. However, these are often unfair. Households and businesses that have already taken significant steps to conserve water must scale back further by the same percentage as those households and businesses that have not implemented water-reduction measures.
At this point, and with much of the country in serious to severe drought conditions, the only option is to price water to reflect scarcity. Doing this should come as no surprise, for ultimately this is how our capitalistic system works.
A decrease in water would result in an increase in charges. The increase in charges would help reduce water consumption and allow astute water departments to fund infrastructure upgrades and operations improvements to enable them to deliver water more efficiently at less cost. The long-term implications: We would no longer underprice water, but instead treat it as the precious natural resource that it is.
