Managing long-term capacity in the age of conservation

Abstract

This paper illustrates the long-term planning challenge for water utilities in the age of conservation using detailed operating data of three sampling entities from the mid 1990s to 2009. The induced behavioral change from conservation measures is found to be of a permanent nature and the unit consumption to be in long-term descent. This in turn may call for a paradigm change in pricing and capacity planning for utilities. The ever-declining per capita consumption alters many commonly acknowledged norms for utilities, in particular for fast growing ones that may have taken on additional financial leverage to support previously anticipated growth. If not managed properly, the full cost recovery mechanism of pricing may force those utilities into an unsustainable future of ever-decreasing total demand and everincreasing cash flow shortfall. Collection of more detailed water demand data in a timely fashion may prove to be a necessary exercise for sound management of median to large water utilities. the water demand by its users would inevitably recover after water conservation restrictions are lifted. This is a critical question of 'if' that has profound impacts on the long-term capacity management for water utilities. In many instances, a constant per capita water demand, as an industry form, is presumed in the long-term capacity and financial planning for those utilities. This implicitly assumes the incremental impact of consumers' water demand in response to conservation can only be used to prevent further 1188