Recent state legislative sessions have seen an increase in bills filed that would encourage or require cities to engage in water conservation measures.  A bill passed in 2007, H.B. 4, requires each water utility with 3,300 or more connections to submit to the state a water conservation plan and a report on progress in carrying out the plan.  Legislation passed in 2011, S.B. 181 and S.B. 660, requires state agencies to develop a uniform methodology for cities to use in developing water conservation plans.  So far, little legislation has passed that directly mandates specific water conservation measures by cities, but such legislation is sure to come at some point in the future, probably as soon as 2013.  The legislature should avoid passing such one-size-fits-all mandates.

The truth is this:  There are different methodologies that cities can use to address water shortages.  One method that isn’t used much yet in most of the nation, including Texas, is accurately pricing water as a commodity based on scarcity.   Experts agree that most water utilities in our nation essentially give water away almost for free, because water supplies have historically been seen as unlimited in many areas.  A residential water bill in such locations is primarily designed to pay for the delivery infrastructure, with only a token nod toward potential scarcity.   As populations grow and droughts affect supply, however, some localities are starting to re-think “free water” and are beginning to price usage more realistically based on how much water actually exists.   Such aggressive (some would say realistic) pricing could potentially “solve” almost any water crisis, if pursued aggressively enough.  The problem is one of politics—citizens aren’t yet used to paying for water as a commodity, and governing bodies are loath to move too quickly in this direction.  

There is data suggesting, however, that Texas cities are slowly but surely transitioning to water pricing based on scarcity.   According to the League’s annual Water and Wastewater Survey, the average price of 5,000 gallons of residential water has risen by 52 percent from 2002 to 2012 ($19.96 to $30.34), while inflation over that period has only gone up 28 percent.   While there are likely a variety of reasons for the price of water increasing nearly twice as fast as inflation, one significant reason is likely to be a slow philosophical transition in some cities from “free water” to water priced as a finite commodity.

Ave Residential Water Rate

Which method of addressing water shortages—restricting usage, repairing/replacing inefficient infrastructure, or scarcity pricing—is the best?   Whatever the city decides is right for itself is usually the correct method.  Local control, in other words. 

Numerous cities in the Metroplex recently proposed permanent watering restrictions even as the recent drought abates somewhat in that region.   That course of action was right for those cities, and thus the proper result.  Other cities in the state are experimenting with scarcity pricing by raising rates, sometimes in a tiered price structure.  As reported in a June 8, 2012, article in the New York Times, the cities of Odessa and Big Spring just in the last year switched from “uniform” pricing to tiered-rate pricing based on usage (tiered-rate pricing is one method of raising the price of water while attempting to protect low-volume household users).   Some cities are experimenting with a combination of both methods. 

In a state where the average annual rainfall ranges from about 60 inches in Port Arthur to about 9 inches in El Paso, one method will not work well at all:  a top-down, state-imposed mandate to do one thing or the other.   Every city water system is different and unique compared to every other system.  Water usage restrictions may be completely unnecessary in a city that aggressively implements scarcity pricing. In such a city, state-mandated measures will be a redundant nuisance, as the goal of lowered water usage is solved through an entirely different method. 

Admitting that conservation may be unnecessary for some Texas cities will be politically sensitive, to say the least.   Some think-tanks and non-profit groups in the state are wedded to a philosophy that water conservation is the sole solution.  These groups try to browbeat city officials and state legislators into choosing conservation in every case, hence the increasing number of poorly-thought-out legislative initiatives.   When conservation is appropriate, it’s because cities thought it through and decided it’s best for that locale, not because others decided the issue for them.

The Texas Municipal League will continue to oppose state mandates relating to water utilities of any and all types.  When our city residents turn the knob, water will continue to flow not because of unfunded state mandates, but because each city water utility will have made a local decision about how to address shortages.

TML member cities may use the material herein for any purpose. No other person or entity may reproduce, duplicate, or distribute any part of this document without the written authorization of the Texas Municipal League.

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