1 Water Education Foundation and ACWA April 16, 2009

2 Command & Control Historical Usage Efficiency Standards Financial Contribution Economic Efficiency

3 Your Agency Your Agency Command & Control Historical Usage Efficiency Standards Financial Contribution Economic Efficiency

4 Your Agency Your Agency Command & Control Historical Usage The Criteria that are most important will help guide an agency to the right policy approach. Goal: To determine a set of criteria that can evaluate these policy approaches.

5 How do you allocate resources to end users?  Who should pay for drought penalty?  If one views the additional charge as a penalty, it does not fall under Proposition 218.  Confirm with your Legal Counsel

6 Enough to meet Water needs? In proportion to financial contribution? As much as customers are willing to pay for?

7 Easy to implementEasy to administerEasy to understandFreedom of choiceNexus for drought pricing

8 Policy: Majority of cut back should occur in outdoor water use Sanitary UseEconomicDiscretionary or Aesthetic

9 Target “Wasteful Water Use” by adopting Drought Ordinance  Limit outdoor irrigation  No driveway hose-offs  No car washing Example: City of Los Angeles No residential sprinklers between 9AM – 4 PM No car washing or hosing off driveway

10

11 Example: Santa Clara Valley Water District, East Bay MUD

12

13 Establish efficiency standards for customers:  Indoor water use  Outdoor water use Does not penalize historical conservationDoes not reward historical water abusers

14 Gallons per dayNumber of Residents Indoor Usage

15 Outdoor Usage

16 Meter size? Zip Code? Parcel Size? GIS? % of Parcel? Lot size - footprint?

17 How much water is lost? How much water is lost? Define “allowable” crops Define Seasonal Needs

18

19 Outdoor: Change crop coefficient or adjust ET Outdoor: Change crop coefficient or adjust ET Indoor: Reduce gallons per day allocated Indoor: Reduce gallons per day allocated

20

21 Allocate water in proportion to customers’ financial contribution to the system Allocate water in proportion to customers’ financial contribution to the system More water will be allocated to the largest meters More water will be allocated to the largest meters

22

23  Price water based on willingness to pay and the desired level of aggregate consumption  Based on economic theory that resources can be allocated efficiently based on price  Some water should be provided economically to provide for basic, sanitary needs P1P1 P2P2 Q2Q2 Q1Q1

24

25

26

27 Sanjay Gaur Principal Consultant Red Oak Consulting (o) (c)