Water Conservation:  Always the Right Answer?

Recent state legislative sessions have seen an increase in bills 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. H.B. 252, passed in 2013, requires each municipally owned utility to notify the Texas Commission on Environmental Quality (TCEQ) when the available water supply is less than 180 days. The legislature passed two additional bills in 2013 addressing water conservation measures: (1) H.B. 857 requires certain municipally owned utilities to file an annual water loss audit with the Texas Water Development Board; and (2) H.B. 1461 requires the utilities that file a water loss audit to notify its customers of the water loss reported in the audit.

So far, little legislation has passed that directly mandates specific water conservation measures by cities, and 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” 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.  

However, as populations grow and droughts affect supply, 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 a political one — citizens aren’t yet used to paying for water as a commodity, and governing bodies are loath to move too quickly in this direction.  

In Texas, data suggests that 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 64 percent from 2002 to 2014 ($19.96 to $32.81), while inflation over that period has only gone up 32.1 percent.   While there are likely a variety of reasons for the price of water increasing 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. 

 water rates

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

Numerous cities have imposed watering restrictions in recent years.  The have done so because the city council decided that was the correct course of action for those cities.

Water restrictions, conservation education, and higher prices have achieved the result of Texans using less water. According to the League’s survey, the average monthly residential consumption is decreasing each year (with a few outliers), averaging a total of 6,523 gallons in 2014 compared to 8,581 in 2002. 

Interestingly, one side effect of lower use is a loss of millions of dollars in anticipated revenue to some cities. That anticipated revenue generally is budgeted to pay for fixed or infrastructure costs and in certain cases, to pay off debt. In some cases, the debt was issued to finance new wastewater plants or water-related projects.

Oddly enough, in some cases conservation drives up water prices due to the lost revenue to those cities and utility systems. This conundrum is relatively new to Texas cities, and it will be best solved locally by each city as it determines its “new normal” in water usage and rates. Many cities will need additional revenue to make up for their revenue losses. Some cities have raised rates, and at least one city is discussing adding a “conservation surcharge” onto its water bills. 

In a state where the average annual rainfall ranges from about 60 – 70 inches in East Texas to 5 – 10 inches in West Texas, 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 a city council has thought it through and decided it’s best for that city, 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 city residents turn the knob, water will continue to flow.  But not because of unfunded state mandates.  It will happen 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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