© 2012 Water Research Foundation. ALL RIGHTS RESERVED. © 2014 Water Research Foundation. ALL RIGHTS RESERVED. No part of this presentation may be copied,

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Presentation transcript:

© 2012 Water Research Foundation. ALL RIGHTS RESERVED. © 2014 Water Research Foundation. ALL RIGHTS RESERVED. No part of this presentation may be copied, reproduced, or otherwise utilized without permission.

© 2014 Water Research Foundation. ALL RIGHTS RESERVED. Sustainable Water Management Conference Denver, Colorado March 31, 2014 Presentation by Jack C. Kiefer, PhD

© 2014 Water Research Foundation. ALL RIGHTS RESERVED. Water Demand Forecasting in Uncertain Times: Isolating the Effects of the Great Recession WRF Project #4458 Jack C. Kiefer, PhD

© 2014 Water Research Foundation. ALL RIGHTS RESERVED. Overview Project goals, objectives, and principal tasks Progress and selected findings to date —Great Recession —Utility Survey —Analysis of utility data Next steps

© 2014 Water Research Foundation. ALL RIGHTS RESERVED. Principal Research Themes and Objectives Economic Reasoning and Water Demand Pathways Assess how water demand is affected by short-term economic shocks and through which economic channels 1.Prepare White Paper on Macro-Economic Linkages to Water Demand 2.Conduct Survey of Utility Experiences

© 2014 Water Research Foundation. ALL RIGHTS RESERVED. Principal Research Themes and Objectives Enhancing the Quality and Effectiveness of Water Demand Forecasts Analyze how water utilities may be better able to anticipate, adapt to, and minimize impacts of future economic cycles on water demand planning 1.Formulate Models for Use in Forecasting 2.Recommend Methods and Future Research

© 2014 Water Research Foundation. ALL RIGHTS RESERVED. What do we know about the economy and water use? Water use is influenced by economic factors Municipally-supplied water is a “normal good” — higher (lower) household incomes increase (decrease) demand Production of goods and services requires water as a direct or indirect input

© 2014 Water Research Foundation. ALL RIGHTS RESERVED. Direct Economic Pathways of Influence Source: original construct by Jack C. Kiefer (2013)

© 2014 Water Research Foundation. ALL RIGHTS RESERVED. Defining a Recession The National Bureau of Economic Research (NBER) Business Cycle Dating Committee: “A significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.” Two consecutive quarters of negative growth in gross domestic product sufficient but not necessary condition

© 2014 Water Research Foundation. ALL RIGHTS RESERVED. Qualities and Characteristics of the “Great Recession” “Great Recession” lasted 18 months from peak to trough —December 2007 — June of 2009 —Longest in official duration and (arguably) the most severe recession since the Great Depression (which lasted 43 months)

© 2014 Water Research Foundation. ALL RIGHTS RESERVED. Qualities and Characteristics of the “Great Recession” Real GDP  5.1% Unemployment rate  100% Under-employment rate  100% Real household mean income  11.1% Real household median income  7.7% Median family net worth  38.8% Source of statistics: Federal Reserve System Board of Governors (2012)

© 2014 Water Research Foundation. ALL RIGHTS RESERVED. Qualities and Characteristics of the “Great Recession” Source of statistics: Federal Housing and Finance Agency; Department of Commerce, US Census Bureau

© 2014 Water Research Foundation. ALL RIGHTS RESERVED. Qualities and Characteristics of the “Great Recession” Source of statistics: Federal Reserve System Board of Governors

© 2014 Water Research Foundation. ALL RIGHTS RESERVED. Qualities and Characteristics of the “Great Recession” Source of statistics: Federal Reserve System Board of Governors

© 2014 Water Research Foundation. ALL RIGHTS RESERVED. Qualities and Characteristics of the “Great Recession” Source of statistics: Thomson Reuters/University of Michigan Surveys of Consumers

© 2014 Water Research Foundation. ALL RIGHTS RESERVED. Macroeconomic Pathways and Indicators

© 2014 Water Research Foundation. ALL RIGHTS RESERVED. Majority of survey sample experienced declines in water use

© 2014 Water Research Foundation. ALL RIGHTS RESERVED. Reported decreases in use suggest a considerable range of impacts

© 2014 Water Research Foundation. ALL RIGHTS RESERVED. Observed declines in demand associated with many factors

© 2014 Water Research Foundation. ALL RIGHTS RESERVED. Majority of utilities reporting a decrease in water use have not fully recovered

© 2014 Water Research Foundation. ALL RIGHTS RESERVED. The recent economic downturn affected planned investments for some utilities

© 2014 Water Research Foundation. ALL RIGHTS RESERVED. Majority of respondents expect flat or continuing declines in demand

© 2014 Water Research Foundation. ALL RIGHTS RESERVED. Trends in use prior to the Great Recession

© 2014 Water Research Foundation. ALL RIGHTS RESERVED. ~15% drop

© 2014 Water Research Foundation. ALL RIGHTS RESERVED.

Interim Observations Firm conceptual basis for linking economic activity to water use Water use was impacted (reduced) during and after the recession for many water providers Some declines in water sales were large in some places There were multiple reported manifestations of impacts (on revenue, customer base and other) Historical time series data show the association of declining sales with recession and economic indicators Must attempt to differentiate or account for the effects of other factors

© 2014 Water Research Foundation. ALL RIGHTS RESERVED. Current and Future Activities Search for and collect additional data for economic indicators —Especially “leading” indicators —Regional indicators where available Statistical modeling —Regression —Time-series econometrics Reporting Communication

© 2014 Water Research Foundation. ALL RIGHTS RESERVED. Thanks! Utilities —Tampa Bay Water —San Diego County Water Authority —Fairfax Water (VA) —San Antonio Water System —New York City Department of Environmental Protection —City of Phoenix —Miami-Dade County —Anderson Regional Joint Water System (SC) American Water Works Association Maureen Hodgins, Water Research Foundation Other research team members —Grace Johns (Hazen and Sawyer) —Snaith Economic Advisory Services —Ben Dziegielewski Jack C. Kiefer, Ph.D