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

4. Strong price signal, incentive to conserve Weak price signal, incentive to conserve

5. Examples of price-based conservation Water rateDefinition Drought DemandRates are higher during drought periods. Excess-UsePrices are much higher for above-average water use. Inclining BlockPrice per block increases as water use increases. Indoor/OutdoorPrices for indoor use are lower than prices for outdoor use. PenaltiesCharges customers pay for exceeding allowable limits of water use. Scarcity PricingCost of developing new supplies is paid by existing users. Seasonal Amount charged per unit varies by season. Water rates are higher during the season of higher demand (usually summer). Sliding-ScaleUnit price for all water use increases based on average consumption. Spatial Pricing Users pay for the actual cost of supplying water to their establishment. Those farther from the central water source will pay more. Time-of-UseWater rates are higher during peak hours or days of the week. Water Budget Block rates are defined uniquely for each customer, based on an efficient level of water use for that customer. Source: Vickers (2001), Beecher et al. (1994), Mayer et al. (1998).

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. Relative costs and water savings Nonprice conservation

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 Annual water savings, 2009 (mgd) Annual water savings, 2019 (mgd)Cost per mgdFirst 5 yrs cost Benefit/cost ratio Program Residential water audits 0.0530.077$546.85$71,3351.13 Public education0.30.41$400.59$314,2801.53 Toilet flapper rebate 0.0050$828.04$11,7621.03 Landscape water budgets 0.0130.023$754.33$64,1750.88 New home points program 0.50.77$38.18$100,00016.2 Landscape/irrigati on codes 0.020.04$276.07$128,3502.6 Inclining-block rate structure 0.140.42$49.4$54,00014.26 Combined results1.172$137.5$655,5524.44 AWWA (2008)

13. Typical water savings – plumbing fixtures Without ConservationWith ConservationWater Savings Cost savings* Percent of total (%) Amount gpcd Percent of total (%) Amount gpcd Percent (%)Per year/ household End Use Toilets28.4%18.323.2%10.444% $38.93 Clothes washers23.1%14.923.4%10.530% $21.68 Showers18.8%12.222.4%10.018% $10.84 Faucets16.0%10.322.5%10.02% $1.48 Leaks10.2%6.63.4%1.577% $25.13 Baths1.9%1.22.7%1.20% $0.00 Dishwashers1.6%1.12.4%1.10% $0.00 Total Indoor Use100%64.6100%44.731% $98.06 GDS Water Associates (2002) * Assuming $5.00/kgal and 2.7 people/household; excluding initial investment

14. Residential – single family (suburban) Savings/ capita People/ unit Savings/ unit Measures/ unit Savings/ measure (gpd) Cost/ measure Cost/kgal saved Delivery method Residential, single family Toilet Retrofit10.52.728.5213.3$85$1.24 free or rebate Showerheads and Aerators 5.52.714.927$7$0.36free Clothes Washer Rebate 5.62.715.2114.2$120$2.46rebate Irrigation Audit-High User 18.42.7501 $70$1.41staff Rainwater Harvesting 14.62.739.71 $250$1.66rebate Rain Barrels1.62.74.31 $45$2.76 rebate or distribute GDS Water Associates (2002)

15. Residential – multifamily (suburban) Savings/ capita People/ unit Savings/ unit Measures/ unit Savings/ measure (gpd) Cost/ measure Cost/kgal saved Delivery method Residential, multifamily Toilet Retrofit10.51.718.31.214.1$75$1.04 free or rebate Showerheads and Aerators 5.51.79.61.27.4$4$0.19free Clothes Washer Rebate 11.7 0.05630$120$1.70rebate Irrigation Audit 1.41.72.5n/a125$150$1.21staff Rainwater Harvesting 5.31.79.2n/a461.7$2,050$1.17rebate GDS Water Associates (2002)

16. Commercial Savings/ measure (gpd) Cost/ measureCost/kgal saved Delivery method Commercial Toilet Retrofit26$150$1.12free or rebate Coin Clothes Washer Rebate 45$170$1.60rebate Irrigation Audit125$150$1.21staff Rainwater Harvesting 461.7$2,050$1.17rebate GDS Water Associates (2002)

17. Conservation versus supply expansion Cost/kgal Residential Conservation Indoor rebates $0.50 Pool cover rebate $1.11 AZ state water bank $1.41 Water smart landscape rebate $1.43 Outdoor rebates $2.00 Supply Expansion 6-basin groundwater pipeline $3.57 5-basin groundwater pipeline $4.05 River diversion $6.26 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. Damian C. Adams 316 Ag Hall, Stillwater, OK 74074 405-744-6172 damian.adams@okstate.edu Thank you