16 Aug 2012

Higher costs or higher prices?

DW sent me this response to my question ("how do you know you're making a difference?"):
You’ve been explaining that higher prices will result in lower demand. That’s exactly what has been happening here in Southern California. The local water districts have basically doubled water rates over the last few years and customers are finding ways to use less. You could use LADWP, or the City of San Diego’s water dept. as examples of price driven efficiency in your speeches if you wanted to. They are increasing prices incrementally to try to avoid outright water customer revolt, but prices are steadily going up, so your arguments haven’t been in vain. Whether that increase efficiency in use will be enough to avoid disaster as our population growth crushes available water supply, I don’t know, but it will be interesting to watch.
Here's my "good news, bad news" comment:
Good point, except that those prices result from supply-side actions that raise costs that must be recovered in price; they are not pre-emptive signals to use less water. Good news is that water use goes down; bad news is that all that money is GONE -- to the plant expenses (the engineering-industrial complex). I prefer higher prices that lead to a fall in demand while leaving surplus revenue that can be rebated to customers.