Drought 101: The Water Biz

“You can get to sustainability,” says David Zetland, a water economist and author of the book Living with Water Scarcity. “But you can’t get there without putting a price on water.”

What is the price of water these days anyway? Most of us Californians can tell you how much a gallon of gas is right now, but when it comes to our most precious resource, the numbers aren’t so clear.

Unlike oil, we’ve long worked under the assumption that our supply of water is unlimited. In the Western United States, water itself has been virtually free or dirt cheap, with major aqueducts and pipelines subsidized by the federal government, and meager municipal billing profits going toward the most baseline infrastructure and management (remember last week’s madness?).

With drought upon us, it’s clear that the water business is not delivering the services the market really needs—including responsible stewardship of our inventory. Change is needed, and a lot of people think that begins with setting a smarter price.

Will the price go up for everyone? Water is of course not only a market commodity, but a naturally occurring life-giving substance that you might say every human being has a right to.

Let’s look into it.

The Buyers

Yes. The grand majority of California’s human-accessible water supply* is used to grow food that’s exported globally, and that presents a major national challenge. We’re going to work on untying that knot next week, because to start, we wanted to turn our attention to the water you and I buy here in the city.

While residential use only accounts for about 20% of the pie, that doesn’t mean we can ignore it. Across the board, our value system needs retooling. Americans pay less for water than almost any developed nation, and we pay less for it than any other utility—gas, electricity, etc. Single-use water comes with a big ecological cost, and the agencies who manage it need to consider that when doing business.

The Sellers

Think about our big state water agencies (there’s only a few: Central Valley Project, State Water Project, Metropolitan Water District of SoCal) as water wholesalers, and each of our municipalities as retailers. Water gets sold a lot like paper clips and panty-hose: cheap in bulk, and at a different price on every corner.

If your water bill is exorbitant (here’s looking at you, Antelope Valley), the vast majority of that money is not going toward water, it’s going toward overhead. That overhead can be due to increased expense in any part of the urban water infrastructure: pipe repair, system upgrades, growth and development, and bureaucracy.

Pipes aren’t cheap. Not to mention reservoirs. Aqueducts. A few thousand water treatment plants, repairs, research, personnel…The actual water, oddly enough, is usually the cheapest thing on the tab.

Measuring Your Use

So how does the city decide how much to bill you for the water itself? As it turns out, few cities are keeping good track of their stock.

Many water districts in California still measure water use manually. That means a person drives around in a truck going from meter to meter, lifting up a grate in your sidewalk, brushing the dust off a spider-encrusted gauge and reading as best they can your usage for the previous 6-8 weeks. Can you just see a paper boy biking past? The milkman walking down the lane? It feels like 1956 because that’s precisely when this system got its last upgrade.

The pen and paper approach is no way to effectively verify data, pinpoint major leaks in real time, or see patterns of use by neighborhood. With such little data and no incentive to track how much water we use, it’s nearly impossible to manage conservation.

The High Tech Solutions

Just 20 miles east of LA, the great city of Covina measures its meters with devices that can track water use by the minute. Wait, why are we not all doing this??

Because each municipality in California has the right to charge whatever it wants above the wholesale water rate (seriously the variation can be staggering), any range of funds can be available to each city for a variety of projects that it chooses to prioritize. Covina just happened to spend its extra funds on a state-of-the-art metering upgrade that we can now all look at with adoration.

With mandatory water cutbacks imposed by the state, water managers, or at least the smart ones, should now see the value in better metrics.

Priced to Save

So we have to ask, within this system we have, what small changes could make a big difference? How could we as a state do a better job at incentivizing conservation?

What if the amount you pay for your water depended less on how your city spends its department budgets, and more on how much water you actually use? Like the innovative  California State Assembly Bill 2882  encourages.

The idea is simply that the more water you use, the more you pay. So, if you’re using just enough to meet your basic needs, your bill shouldn’t be a big drain on your bank account. But over a certain amount, the price per unit goes up, and then up again, creating tiers of usage. So for those of you with a big lawn, we wish you luck, and a lot of cash.

Cities that implemented this structure (Corona, Roseville, Irvine) found it to be wildly successful. Like 25% reductions successful! So why is it not being implemented everywhere? Dramadrama, and more drama

1* About 60% of all the actual water in California, human-accessible sources exclude most wetlands and all protected streams, lakes, and aquifers.


Now, this just covers how we pay for water in urban environments, and long story shot, we need to keep close track of the water we use, and create a price structure that encourages conservation. If we do that then we'll solve the drought. Ha! Hardly. What about rural water you ask? Agriculture, anyone?

Next week, we’ll be exploring state water rights, access to groundwater and how our farmers can benefit from more data driven water management systems.