20 May 2009

Aguanomic Metering

A reader asks:
  1. What is your opinion on the billing structure for the other “classes” business/government, irrigation users (same treated water used in a separate meter for home owner associations, outdoor irrigation for strip malls, freeway irrigation), residential, and multi-use?

  2. Do you believe that water should be charged differently amongst classes and different base rate cost per unit of water (commodity rate)? Or should the water cost the same based on what it costs to purchase/treat/deliver etc.?

  3. Should the classes be looked at separately and independently, thus, if each class is asked to reduce a different amount of water (estimated reduction) than the cost per unit is determined and would vary. Do you concur with this type of evaluation?
These questions give me the chance to clarify how things I repeat here and there fit together.

First, I think that residential water should be priced with increasing block rates that are "wide" based on the number of people in the household.

Second, I think that multi-family residences should have sub-meters.

Third, I think that non-residential customers should ALL be treated the same. Their meter rates should have HIGH fixed costs (to encourage them to adopt the smallest meter size) and increasing block rates within each meter class. The larger the meter, the larger the initial cheap block of water, but the next block is ALWAYS much more expensive.

My inspiration for prices is that they should be cheap where "human rights" are concerned (residential rates). All other rates should recover costs AND be high enough to choke demand (so there's no shortage).

Finally, rate increases should occur at the highest blocks first. After that, I'd narrow blocks before I'd raise rates in the earlier blocks.

Bottom Line: Prices should be FAIR for the basic unit(s) of human right water. After that, commodity water should have similar prices to all comers.

14 comments:

Eric said...

Where does residential water for lawns and landscaping fit into your scheme? How should that be priced? What about water for agriculture? Should their be a best practices pricing or can farmers or lawn owners use what they want?

Thanks,

Captain Flounder said...

Mixed-use systems are becoming an increasing feature in California as the state continues to urbanize. We see more and more districts which upgrade facilities as they modernize - to meet drinking water standards, for example, as subdivisions creep in - but which continue to serve agricultural customers. Is it fair to pass on that increment of increased cost attributable to the drinking-water upgrade to existing agricultural customers? Proposition 218 has something to say about that, but the precise issue has not yet been litigated with an appellate result.

On the subject of whether all users of "commodity water" should be treated the same, I disagree. Agriculture uses a lot of water, for obvious reasons, but can't compete with industrial users for that water because of cost structure. If we want to push agriculture out of California - and with it, incur a set of other costs - treating it like just another price-taking customer competing in front of the almighty market god is probably just the way to do it.

dWj said...

Eric: I can't answer for David, but I'd imagine it doesn't matter whether you're using the water to take hour-long showers, or whether you've upgraded your toilet to free up water for your lawn; given the amount of water you're using, it should be put to the uses you value most, and that decision isn't really (per se) the rest of our business.

David: Any idea how much it would cost to submeter an apartment building built in the Bronx in the 1930s? Any idea how I would go about finding out before possibly suggesting it to a coop board? (You know, hypothetically...) They place restrictions on dishwashers etc. to try to reduce water use, and I've assumed that submetering after the fact is simply too big a capital expense. If it's practical, I would love to push for this.

David Zetland said...

@Eric -- dWj is right.

@CF -- ag would do fine with all-in-auctions. They would MAKE money in markets. Further, industry could never absorb all the water that ag would "not be able to buy"

@dWj -- I have no idea on submeters, but I bet you can call a few contractors. I guess that the permit process would be more annoying than cost...

Eric said...

I was asking a different question but badly.

Here is a potentially clearer version.

Should residential water rights include enough water to water a large lawn or only enough to provide water for standard household needs?

I don't care what the person actually does with the water. I just wondered whether the basic right would cover city or country living and whether it would be enough to water a large lawn or raise vegetables, etc.

Thanks.

Captain Flounder said...

David, I concur that industry (and urbans) are not nearly in the position of buying up all ag water. They can only take a fraction of it, at best. So the idea that ag will be "wiped off the map" is hyperbole from me. What ag really stands to lose is at the margins, at least now.

I don't think ag will gain from "all in" auctions. I think certain ag water right holders will. But the water will flow from ag to urban/industrial use, meaning that some ag is going to go out of production if there are not offsetting conservation gains. And I think fallowed land is not good - it certainly results in ancillary habitat-related negative impacts, and ancillary employment-related negative impacts, and so forth. And I am most certainly against involuntary fallowing caused by water transfers, where there is a disconnect between the trustee of a water right and the underlying landowner who depends upon that water right.

David Zetland said...

@Eric -- water rights refers to people, not lawns.

@CF -- I agree that fallowing and third party impacts can be negative. All-in-auctions merely maximize the efficiency with which water moves between users (inside a sector or across sectors), and -- at the same time -- they direct $ to those who sell water, often farmers.

Eric said...

@David,
Is your water rights plan for cities and against suburbs (which tend to need more water per person if you do not want to live among weeds)?

If I raise vegetables and fruits for my own use and to give to neighbors, is that ag water or residential water?

I am asking because the details of a plan seem to get tricky.

Eric said...

If I have kids and want to make a playground for them and their friends, would this water be so expensive that the kids could only play at a public park?

Again, I am missing a lot of details.

David Zetland said...

@Eric -- lawns, gardens and kiddie play areas are all luxuries (relative to cooking, hygene, drinking). Living in the suburbs is NOT a right -- it's a luxury...

After people drop their use by 50% we can talk about how much "waste" is left...

Eric said...

@ David

So does this mean that your preferred organization of America is apartment buildings in cities and farms, nothing else, not even lawns on farms?

This is what it sounds like.

Such an America would free up a lot of land, for instance all of New Jersey and a lot of the Bay area.

It would also get rid of golf courses, swimming pools, and most residential developments. The town where I grew up in northern New Jersey and all of the towns around it would go away. The residents would have to move to Newark and live in apartment buildings.

To get out of apartment buildings, my grandparents moved to the end of the railway line. The year was 1910. My parents then moved to the end of the railway line again, the year was 1945, right after WWII.

Would you change all of this? Remember that New Jersey gets 43 inches of rain a year.

Thoughts?

David Zetland said...

@Eric -- I am saying nothing like that. I am saying that the cheapest block of water should go to humans for human use. ALL OTHER uses should face the same price -- whether it's lawns, golf courses, pools, etc.

Note that I am NOT talking about ag water, (the rights to) which is often owned by and used on site. Even then, I discuss reallocation of ag water in all-in-auctions.

Eric said...

@David
I am still confused. I am trying to get you to define 'human use' and do not have a definition that makes sense to me yet.

Here is another attempt.

Consider a family of five in a one room apartment in the Castro and another family of five in 5 miles west of Reading, CA. Do you allocate the same amount of 'human use' water to each of them? If the family in Reading raises four chickens and has a dog, is that water charged at a higher rate. What if the family in reading has a grandmother living with them who has to take a bath and not a shower? Is her bath water extra?

To me, when I apply specific microexamples to your broad categories, I end up with lots of special cases, each of whom will fight for 'their' water. There seem to be hidden inequalities in your scheme (city/suburb, older/younger,pet owners/not pet owners). I am trying to bring them out in the open for me and anyone else to see.

As another example, I would bet that rural citizens, who live where the water is, would not be enamored of paying more for their water and, in their minds, subsidizing city dwellers.

Just a thought.

ER said...

@DWj -- "...cost to submeter an apartment building ..."

I would recommend making connections with a few individuals at local history museums in the regions you're studying. I assume you're done with that question now but as a resource for future questions it may be helpful. I know when when I was doing my internship in Anth at the Clark Museum, we had tremendous physical resources as well as personal experience and knowledge. I imagine there are many such museums or historical societies.