Conservation‐oriented rates that reflect the true price of water can change consumers' water use and pay off in reduced operating and development costs. Old and familiar ways of setting water rates can fail to recover the cost of providing water service, can send inaccurate signals as to the worth of this scarce resource, and are becoming more and more difficult to defend. At the same time, revenues from rates and charges are essential if water agencies are to accomplish their mission of providing dependable, potable water on demand. What can water utilities do to price water more sensibly, ensure financial viability, and achieve a publicly accepted and successful rate‐making process? The California Urban Water Conservation Council has developed a technical handbook on alternative pricing approaches and their associated effects. “Designing, Evaluating, and Implementing Conservation Rate Structures”1 demonstrates how quantitative tools can be used to measure rate effects, develop strategies for managing the results of rate changes, and provide insights about the process of successful rate‐making. By linking technical knowledge with practical implementation tools, rate‐making that incorporates conservation objectives can be accomplished.
Water budgets, volumetric allotments of water to customers based on customer‐specific characteristics and conservative resource standards, are an innovative means of improving water‐use efficiency. Once thought to be impractical because of technological constraints, water budgets linked with an increasing‐block rate structure have been implemented successfully by more than 20 utilities. Key issues identified in this examination of water budgets and their potential value to North American water utilities include: different practical approaches to water budget rate structures; the benefits and challenges of these approaches; the potential uses of water budgets during drought; and, important steps in the water budget implementation process.
When a utility's costs change quickly, rates can be designed to correctly hedge against revenue uncertainty The shift toward conservation rate structures, although they may provide better incentives to use scarce water wisely, changes who pays what and can increase the variability of future revenue streams to the water agency. Though the definition of the “correct” rate structure varies by community, the managerial strategies necessary to cope with the uncertainty brought about by conservation rate structures apply universally. Revenue instability directly increases water suppliers' borrowing costs and adds indirect costs in the form of more complicated planning to provide for a reliable future water supply. This article describes an empirical study using data from two water agencies that have adopted conservation rate structures. The article proposes ways quantitative tools may be used to (1) measure and cope with added uncertainty and (2) make explicit the magnitude of trade‐offs between revenue stability, equity, and the provision of incentives for efficient use of water resources.
Water efficiency has been broadly described to include both demand‐side management (conservation programs and incentives) and supply‐side management (utility leak detection and repair programs and water recycling). The logic of efficiency that applies to all of these practices is explored and a framework is offered for organizing information about water‐use efficiency. Utilities seeking to plan, design, and implement a successful water efficiency program have often struggled to sort out the costs and benefits that define efficiency, especially with regard to the varying perspectives of the utility, program participants, and society. In addition to providing a hands‐on approach to defining water efficiency and analyzing costs and benefits, the article spotlights the practical tools that evolved from the research project.
scite is a Brooklyn-based organization that helps researchers better discover and understand research articles through Smart Citations–citations that display the context of the citation and describe whether the article provides supporting or contrasting evidence. scite is used by students and researchers from around the world and is funded in part by the National Science Foundation and the National Institute on Drug Abuse of the National Institutes of Health.
hi@scite.ai
10624 S. Eastern Ave., Ste. A-614
Henderson, NV 89052, USA
Copyright © 2024 scite LLC. All rights reserved.
Made with 💙 for researchers
Part of the Research Solutions Family.