After what has felt to me like a cooler than usual April and beginning of May, we seem finally to be changing seasons here. (OK, changing seasons with a vengeance — apparently our temperatures yesterday were record highs.)
Of course, in this part of California, we have two seasons: the green season and the gold season (which some insist on calling the brown season). The winter, and the winter rains, are over. Now it’s time for things to dry out.
This, as Michael O’Hare notes, means that water districts are trying to work out what to do about anticipated water shortages. He writes:
The proposals under consideration [by East Bay Municipal Utility District] are a hodgepodge of tools, including across-the-board price increases (good), price increases only on use above some percentage of recent years’ levels, with the percentages different for different users (not so good), behavioral regulations like no car washing or sidewalk swooshing (probably symbolic, but maybe not ‘merely’ so).
The differential reduction schemes are the ones I’m most diffident about. EBMUD contemplates assigning (for example) targets of 30% reduction to golf courses and parks, 19% to single-family homes, and 5% to industrial users like refineries and manufacturers, each below the user’s average use over the last three years. If you go over the target, you pay super-high rates on the excess. The first thing that bothers me is the implicit moral judgment that the benefit of water use per gallon varies in this way, and the second is that EBMUD is equipped to discern the variation. I myself deplore golf courses and I hope they all turn brown, but I’m not authorized to implement judgments like that and neither is EBMUD; in any case, I think green public parks are an excellent use of precious water and nothing like golf courses both environmentally and sociologically; at least EBMUD could be more discriminating if they have to go down this route.
The second problem is the injustice across similarly categorized users, and the associated perverse incentives it puts in place ( I have carefully not looked at my water bills to see if I’m especially at risk here, so the following has the moral purity of ignorance.) Some people have been very careful about their water use for a long time, and others act as though moving to the desert of California entitles them to live as though they were still east of the 100th meridian. We have a front-loading washer, a dishwasher, a gallon jug in every toilet that’s not extra-low flow, drip irrigation all over the yard except a couple of very small patches of turf, and take only showers (no baths). But we have neighbors who have xeriscaped yards with cacti, gravel, and succulents, and some who collect grey water and use it for their gardens. Asking for the same percentage reduction from all of us punishes the early conservers, and signals everyone that being careless with water now (at least after this crisis) will protect us from future rationing hits, a result that is both unfair and unwise.
(Bold emphasis added.)
What O’Hare describes is a perfect example of the challenges of trying to influence individual behaviors which have collective impacts. To the extent that we view some of these behaviors as individual consumer choices, tweaking the pricing scheme might seem like a sensible way to incentivize some choices over others. However, this approach may end up encouraging individuals to make decisions that are in their economic interests but which have a negative impact on the good of the group.
If there’s a drought looming, a water district would like water users to cut back their water usage. If they don’t, the water district could run out of water, which is bad for everyone.
Ramping up the price of any water usage is one option, but it would fall unfairly on the folks with less money. Water is not something you can opt out of using if the price of using it passes a certain point. We are not a society that openly embraces dessicating the poor.
Since people need to use some water (to drink, to boil ramen noodles, to wash, etc.), a water district wants a policy that acknowledges the necessity of water usage while discouraging water usage that can be avoided. On its face, a policy that discourages water users from increasing their water usage over previous levels seems like a good idea — at least, it might hold water demand constant, rather than letting it grow without constraint. The pricing structure might set one price for each unit of water you use in a month up to your water consumption of that same month the year before, and then a higher price per unit of water you use beyond that. (I know a lot of water districts already display on billing statements how your April 2008 usage compared to your April 2007 usage, and that many gas bills show similar comparisons of gas usage. I don’t know how many actually impose a pass-the-threshold pricing penalty. In any case, there’s a certain wisdom to looking at averages in a given calendar month rather than overall, because demand on water for gardens and lawns is higher during our hot, dry summers than our rainy winters.)
Of course, your situation may have changed since the month being used to calculate your threshold. If your household has more members than it did, for example, an increase in water usage may be unavoidable.
And then there are attempts to get people to reduce water usage of the sort O’Hare describes. Here, as he notes, imposing a targeted reduction (of some set percentage of a household’s average usage) may have perverse effects. The targeted reduction may be easy to achieve for folks who have been profligate in their water usage and well-nigh impossible to achieve for those who had already cut their water usage down to the bone.
This seems to place a financial penalty on those who chose to act for the common good in the absence of a financial incentive while rewarding (or at least, not penalizing) those who only act for the common good when there is a financial incentive for doing so. It’s a strategy where selfish people can be led by their selfish interests to a behavior that is better for the group, but where the altruists get screwed.
Which is to say, announcing that you may impose such a policy in N days seems to incentivize opening up the taps for the N-1 days preceding the new policy, something that actually runs counter to the goal of conserving water.
If a reduction in water usage is the goal, I’m not sure what kind of pricing strategy would best distribute the costs of using a necessary but not plentiful resource. And, policies like the one contemplated by EBMUD make me increasingly doubtful that thinking with our pocketbooks is a good way to cultivate ethical behavior.
Reducing our decisions to dollars and cents keeps us focused on the impacts of our choices to ourselves, financially. It distracts us from the impacts of our choices on other individuals, or on our communities more broadly. Recognizing that those others are of value — that they have interests that matter, too — is kind of at the heart of being an ethical human being.
Of course, EBMUD is concerned with managing water resources, not with the moral cultivation of the customers in the water district. But somehow we seem to have drifted into a place where people feel like they can do whatever they want to do — free from criticism — as long as they can pay the tab. Could it be that folks see the free market (or whatever sort of market it is we actually have) as a system of ethics?
I like freedom to choose as well as the next person. There are plenty of choices I make that are not primarily driven by economic incentives. Indeed, if they were forced on me by pricing structures or laws, they might not feel much like choices.
But I’d really like to nudge myself, and those around me, to a place where we make more of our choices with a mindfulness about how those choices change the choices available to others (and to ourselves down the road). I don’t want it to fall to our water bills to make us be the people we ought to be.
“Ramping up the price of any water usage is one option, but it would fall unfairly on the folks with less money.”
That’s easily fixed: redistribute money. If the water tax brings in $X per month, then give each of the n taxpayers $(X/n).
The poor can then afford to buy the little water that they absolutely need, and if they are effective at conserving then they can use the leftover cash to buy food, gas, and other items in addition.
This is not only the most environmentally effective option, it also helps the poor.
(Am I missing something? This seems like a no-brainer.)
If a reduction in water usage is the goal, I’m not sure what kind of pricing strategy would best distribute the costs of using a necessary but not plentiful resource.
What about a discount off your rate ($/gallon, presumably) that’s a certain fraction of the percent decrease in your total usage for the month, compared to one year ago?
For example: Household A used 1,000 gallons last August. (I have no idea if this is realistic or not; it just makes the numbers easier.) This August, they only use 750 gallons. That’s a 25% decrease, so let’s say they get a discount of 12.5% off their $/gallon rate. That is, if the base rate is $x/gallon, their bill is 750*.875*x = 656.25*x dollars.
Household B used 750 gallons last August. This August, they use 650 gallons. That’s a 13.33% decrease, so they get a discount of 6.67% off their $/gallon rate. That is, if the base rate is $x/gallon, their bill is 650*.933*x=606.17*x dollars.
Hmm but things don’t work so well for Household C, who used 650 gallons last August and can’t find a way to decrease their usage this year. They end up paying 650*x dollars — almost as much as Household A, who used a hundred gallons more!
I think the real problem here is that the number of gallons used isn’t a sufficiently sensitive metric. It doesn’t take into account what that water is being used for — a family of two parents and two teenagers in a townhouse in San Francisco might use as much water as a couple in eastern Alameda County with a quarter-acre lawn, but the burden of conservation should probably not fall evenly on both shoulders.
Just throwing this out without having thought it through all that much, hopefully other folks will improve on it. What about setting the price at the average usage of a sector? The average usage of a park of x size, the average usage for families of four, five, &c. Early conservers will be well below the average and the profligate will have to get closer to the cultural norm. The first problem I see is the privacy problem of having to announce the number of people in a household and the second is the problem of people with special needs–elderly that feel safer sitting in a bath (with accessibility features) than standing a shower (without–please don’t tangent into a thread about which is better for the elderly, just assume I came up with a better example), or something like that. Haven’t worked out the fix to either. Improvements anyone?
I’m not sure if this is true for all of EBMUD’s service area, but in Oakland and Berkeley, water/sewer bills are almost always the responsibility of the landlord, not the tenant.
This has drawbacks in terms of setting up incentives to change individual behavior, since it’s my landlord who will profit from my painstaking individual conservation efforts and not me, but it does help cushion the impact of price spikes on the people who are likely to be most hurt.
Apparently the next “crisis” is that America is running out of water. This is mostly an issue in the west, where growth is high and fresh water is rarer than in the east. Here is one example of the brewing panic:
The growing human population is creating cities where desert or scrub land used to be. Rainfall always has been and always will be in short supply. Only so much water can be diverted from rivers to satisfy the water needs of these desert dwellers. The aquifers are being drained. Soon there will be demands to divert water from large inland lakes like the Great Lakes which would put those bodies of water in peril.
Oh my god, I can see it now – fish flopping on the muddy exposed bottom of Lake Michigan.
Look, the problem is not lack of water. The problem is lack of market sanity. Water in the west is regulated and sold in a hodge-podge of complex arrangements and negotiations. The whole system is too complex to describe here, but at least one general conclusion can be safely drawn about the whole system: Water is under-priced.
Have you not read “The Tragedy of the Commons”?
Ah, the regressivity of costs when they are determined on a consumption basis. Of course, regressivity is more efficient, which is in large part what is supposed to be good about consumption taxation. And redistribution to the less well-off is less efficient. And efficiency, detached from human benefit, is naturally the ultimate goal of our economy and society. Or so says every think [sic] tank on the right.
“Tragedy of the Commons” — egads, ownership theory doesn’t always do too well for us in the world of natural resources. The conventional thinking is that rain forest belonging to all is not as “efficient” as individually owned cattle feedlots. Unless all true costs are properly tied to ownership and track the activity and the products, though, we trade one problem for another. “Economic activity” becomes overgrazing off of the commons to the detriment of all others. Until the market can determine a way to incorporate the true cost of externalities and does so, the commons won’t do so well. Regulation is contrary to efficiency? Only if the market’s calculus of efficiency is correct.
One pricing scheme that’s been suggested to get around some of the issues you’ve described above is progressively higher prices for increasing amounts of water use. The average American uses about 108 gals/day for domestic use. Take the number of residents in the house (say 3), multiply that by some target usage level (say 90 gals/day) and give that level a reasonably low cost (say 1 cent/gal). If the usage goes above that level, it suggests that the household is using water superfluously or is not taking pains to conserve. Therefore, you make another block with a higher price (say another 50 gals/person/day at 5 cents/gal). If they are still exceeding that level, you up the costs even more. It’s a little harder to calculate for businesses, but it can still be done.
I’m a tenant in Berkeley and pay my own water bill, and last ?fall? got a letter from EBMUD announcing the upcoming price increases for everyone who didn’t decrease their water use.
I can’t remember exactly how they tranched it, because I was having that exhausted thought about having put in a Navy-shower showerhead already, and reusing graywater and everything and how could I reduce?? And then I got to the You Are Expected To: paragraph, which said, “Your water use is already low, you pay no penalties, keep it up.” (Not a direct quote, but close.)
There isn’t a fair accounting for households with more or fewer members, though. I don’t see how we could have one without keeping track of where everyone lived, which could be pretty creepy.