Are We Conserving Too Much Water?

The politically and ecologically correct answer is "no."  Potable water is a relatively finite resource and we – both individuals and communities – should always seek to identify wasteful water usage and reduce it.  However . . .

Many water utilities across Washington State (and the rest of the country as well) have had to raise rates and revise their rate structures to recover fixed costs and debt payments in response to declining revenues, mostly attributable, it is thought, to water conservation.  But, is water conservation the root cause, or is there something more convoluted going on?  How about global warming, economic upheaval, smaller families, water-saving technology changes, the exodus from suburbia to the cities, or (really wild) sunspots?

A short disclaimer is appropriate here, as I make no claim to be an expert on water conservation and utility rates.  I’m simply reporting on an inquiry I recently completed and on a really well-done analysis by John Ghilarducci of FCS Group.

First - the inquiry 

As some of you know, I’ve developed an extensive network of about 350 city and county public works directors, city/county engineers and other senior agency staff.  I’ve used this network to ask the perennial questions - How do other agencies in Washington State handle a given situation?  Does anyone have any sample documents?  What is our collective wisdom on a given issue?

The particular question presented to me for distribution in early April had two main parts:

• How much would your agency's water system revenues have declined over the past five years if you had not raised rates or taken other remedial actions?
• In your opinion, what are the reasons for this decline, and how has your agency addressed this issue?

The full survey results are available here, in PDF.

So, how did people respond?  Well, there were 32 responses.  The water system revenue question is summarized in this chart:

        

Almost ¾ of the respondents indicated a decline of 20% or less.  The reasons given for the decline in revenues are:



Okay, so what do sunspots have to do with water system revenues?  Nothing really, just tried to add a little “twist.”

As you can see, water conservation is seen as the strongest reason for the decline, with weather and economic conditions not so distant seconds.  It is noteworthy that water conservation is perceived as the primary reason for the overall decline in demand by consumers.  That is because the conservation ethic is embedded in everything agencies do, including public education, technological planning, and regulatory guidance. To address this revenue decline, the agencies have taken the following actions:



Most agencies indicated more than one action.

Second - the real expert

John Ghilarducci of FCS Group has been working with utility rate issues for a long time, although rumors that he worked for Thomas Jefferson are unfounded.  John presented a report titled “Managing Financial Risk and Declining Demand” at the Washington Association of Water and Sewer Districts (WASWD) conference on April 13, 2012.  His presentation may be found here, courtesy of FCS Group and WASWD.  [In the following paragraphs, references to the slide (page) numbers in that presentation are noted (S#)]

Declining Demand Documented

Using three regional water suppliers, John shows that water demand has indeed declined in relation to projections made in earlier years.  For example, in 2004 the Cascade Water Alliance (CWA) predicted an average day demand of 74.6 million gallons per day (mgd) in 2050 (S4).  In 2009, the CWA had lowered that water demand forecast for 2050 to 60.3 mgd (factoring in climate change) (S5).

Seattle Public Utilities (SPU) demand from 1975 to 2004 (S7) shows the combined impact of code changes, conservation, improved system operation, and drought on water demand versus a steady population growth.



Another regional supplier, Tacoma Public Utilities, noted that per capita residential water use declined from 92 gallons per day (gpd) in 1990 to 83 gpd in 2004 (S8).

John then asked, “Why is consumption declining?”  He lists four probable factors: weather, economy, demographic factors, and conservation (sorry, no sunspots).

Weather

There is, of course, a direct correlation between weather conditions and water use on an annual basis.  When it is cool and wet, water use declines.  Hot, dry weather requires more water for irrigation and cooling.  So what is the long term forecast for the impacts of climate change, which predicts less snowfall in Washington State and warmer temperatures overall? The CWA states (S13) that: “Climate Change alone adds approximately 3 mgd of water demand to the baseline forecast scenario by 2060.”

Economy

Slides 14 through 19 of the FCS Group presentation graphically quantify the impact of the recent (and ongoing) recession on industrial earnings, unemployment (4.6% in 2007 to a peak of 10.2% in 2009 and is now about 8.2%), per capita income, and median household income.  Slide 18, in particular, has this chilling statistic:

“Preliminary estimates by OFM (Office of Financial Management) (with inflation adjustments by FCS GROUP) indicate that Central Puget Sound median household income declined by 8.7% between 2007 and 2011. This equates to a real annual decrease of nearly $5,900 per household since the 2007 peak.”

Demographic Factors

Demographic changes include smaller household sizes - currently only 2 persons in Seattle and 2.5 in Puget Sound (S20, S21). The rate of household formation has slowed.



A few other demographic trends are impacting water use: smaller residential lots, more people moving back downtown into apartments and condos, and more efficient, sustainable non-residential construction.

Conservation Oriented Code and Technological Changes

Slide 23 notes the impact of the 1992 Federal Energy Policy Act: “A family living in a house built after 1994 uses 10-13 fewer gallons per day than the identical family in an older house.”  Also, more buildings are being constructed to LEEDs standards, which means that these buildings can use 70-80% less water.

In 2008, a house(hold) built in 1990 used over 400 gallons per day.  A house(hold) built in 2007 used less than 250 gallons per day(S24).

Water Rates

Have water rates that encourage conservation reduced usage?  Yes, definitely.  We could cite any number of AWWA Journal peer-reviewed articles to make that case.   But what about the impact of total utility rates?  Water rates are only a small part of overall utility rates. Slide 28 offers intriguing statistics:

In Redmond, total utility bills (sewer, water, and stormwater) have increased 83% from 1999 to 2012 (from about $50 to over $90).  Median household income for King County has increased only 25% over the same periods (not inflation adjusted).

 Conclusions

So, what can we conclude from the preceding discussions?  Have we answered the question: “Are we conserving too much water?"  Well, we can certainly conclude that demand for water - irrespective of population growth - will decrease.  Note this table, based on slide 29:



Can we conclude that water conservation in itself is the biggest factor in reducing demand?  Well, I think so, but this is a blog, after all, so make your opinions known.

Note that the FCS Group presentation also speaks to managing the financial risks of lessened demand.  We’ll save that for a future blog.