• Topics: Food and Resource Economics | Borisova, Tatiana | Water Conservation | Adams, Damian C

Use, Perceptions, and Barriers to Water Conservation Strategies for Florida Water Utilities¹

Acknowledgments

This project was funded by the United States Department of Agriculture (USDA), National Institute of Food and Agriculture (NIFA), under agreement 2008-51130-19537, also known as the Southern Region Water Resource Project.³ The authors would like to acknowledge support for this project provided by the Florida Section of American Water Works Association, Florida Rural Water Association, and the University of Florida Water Institute. We would also like to acknowledge editorial suggestions for this publication by Sanford Berg, Alan Hodges, Carol Fountain, and Travis Prescott, University of Florida.

Executive Summary

Note: This HTML document, FE851-ES, represents the Executive Summary portion only of the EDIS document FE851 located at http://edis.ifas.ufl.edu/pdffiles/FE/FE85100.pdf/.

Using a survey of representatives of Florida water utilities, we examined the use of and barriers for the implementation of water conservation strategies. The main conclusions of this study are as follows:

1. Half of the respondents indicated that factors associated with (a) increasing water demand (inefficient water use and/or increasing population) and/or (b) increasing water delivery costs (treatment cost and/or cost to meet regulatory requirements) will significantly impact the ability of their systems to meet future demands. Less than one-third (28%) of the respondents believed that long-run changes in weather patterns (including regional climate change) would seriously affect their systems' water supplies.

2. According to survey respondents, to meet future water demand, more than half of the water utilities plan to utilize supply-side management strategies, such as replacing or improving water supply infrastructures (56.3%), and securing new water supplies from traditional sources (50.3%). Slightly fewer respondents indicated that their systems plan on using demand-side management strategies to increase water or sewer rates (45.0%), or use non-price programs (39.7%). Furthermore, 39.7 percent plan to secure new water supplies from alternative sources.

3. More than one-third of water systems reported a decrease in their total and/or per capita water delivery over the last five years, implying increased efficiency of water use and water conservation by the systems' customers.

4. The majority of respondents (57%) report that to encourage water conservation, their utility companies are currently using or have used in the past non-price conservation strategies. Mandatory watering restrictions and conservation education/awareness programs are the most widely used.

5. In literature, inclining block rate structures (i.e., rate structures with the unit rates increasing with water use level) are presented as "conservation-oriented" structures that are designed to provide incentives to the customers to conserve water. Eighty-five percent of the survey respondents reported that their utility companies employed inclining block rate structures. The other 15 percent of respondents reported using uniform rate structures (with unit charges independent of the water use levels).

6. Inclining block rate structures varied significantly among utilities. The number of blocks ranged from 2 to 21, with the mean of 4.2. On average, the rate for the first thousand gallons was $1.44 (with the range of $0 – $8.67). The average rate for the 50th thousand gallons was significantly higher – $5.19 (with the range from $0.38 to $45.24). In addition, utilities charged, on average, $12.05 as fixed monthly fee (i.e., the fee that is charged every month independently from the water use level). The fixed monthly fees varied among the utilities from $3 to $28.94. For comparison, among the utilities that used uniform rate structures, water rates ranged from $0.69 to $5.75 per thousand gallons, with a mean of $2.44. In addition, fixed monthly fees ranged from $5.79 to $33.66, with an average of $12.69.

7. Given the rate structures reported by the survey respondents, for a hypothetical household that used 7 thousand gallons of water per month, an average monthly bill would be similar given a uniform or an inclining block rate structure. Hence, for such a household, inclining block rate structures do not necessarily imply stronger economic incentives to conserve water.

8. In contrast, for a household that uses 40 thousand gallons per month, the average monthly bill would be significantly higher given inclining block rate structures, compared with uniform rate structures reported by survey respondents. When averaged among all the utilities that responded to the survey, an average monthly bill would be $208 given an inclining rate structure, and only $96 given a uniform rate structure. Hence, for large residential water users, the implementation of inclining block rate structures creates stronger economic incentives for water conservation, than uniform rates.

9. In promoting water conservation, Florida state and regional agencies should take into consideration the special challenges faced by water utilities owned by municipalities, counties, or the state. In this study, respondents from such utilities were more likely to report that revenue requirements are a barrier for their utilities to implement price- and non-price conservation programs, compared to the utilities of other ownership types. Furthermore, such utilities more frequently considered the subsidies for non-water utility operations in their water rate decision.

10. Barriers to the use of price-based and non-price conservation strategies identified in this study include:

♦ Limited staff and revenue requirements faced by water utilities.

♦ Perceptions and knowledge about the effectiveness of conservation pricing among water utilities' representatives. Although utility representatives perceive water rates as an important demand management tool, one-third (33%) of survey respondents indicated that their utilities did not estimate changes in water use in response to change in rates. When asked to estimate the effect of a rate change, 72 percent of respondents perceived that a 10 percent increase in price will have limited to no effect on water use.

♦ Lack of customer awareness of water rates. Only 45 percent of respondents reported that their utilities display water rate information on their water bills. Lack of access to water rate information may be a factor influencing customers' ability to respond to the conservation price signal.

To access the complete document, go to http://edis.ifas.ufl.edu/pdffiles/FE/FE85100.pdf/.

The Institute of Food and Agricultural Sciences (IFAS) is an Equal Opportunity Institution authorized to provide research, educational information and other services only to individuals and institutions that function with non-discrimination with respect to race, creed, color, religion, age, disability, sex, sexual orientation, marital status, national origin, political opinions or affiliations. For more information on obtaining other extension publications, contact your county Cooperative Extension service.

U.S. Department of Agriculture, Cooperative Extension Service, University of Florida, IFAS, Florida A. & M. University Cooperative Extension Program, and Boards of County Commissioners Cooperating. Nick T. Place, Dean.

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