By: Bob Drew

There are lot of good reasons to adopt the use of alternate water sources such as rainwater collection, grey water recycling, and various other conservation measures.  Return on investment is one of the most talked about reasons.  At Ecovie, we have seen many cases where residential clients install a potable rainwater system because they do not have access to cheap municipal water. Furthermore a well is not always feasible, and trucking tankers of water in (while feasible in emergencies) costs a fortune.  In these cases, the ROI of a rainwater system is very easy to justify.  In other cases, the alternate costs of stormwater management, cost of running municipal lines, and other factors put together make for a compelling ROI justification.

MT ResIn many other cases, most actually, there is a cheap source of heavily subsidized municipal water.  While municipal water may not be as pure and clean as captured rainwater with simple treatment, it is so cheap that in most cases it is hard to justify the cost of a rainwater collection or greywater recycling system on water cost savings along.  That situation may be changing.

With serious water supply issues in many parts of the U.S., especially in California in combination with the nationwide decay of municipal water infrastructure there is a trend toward rising water rates.  We believe this should have a positive effect on adoption of much needed alternative and decentralized water sources which will be part of solving our water management problems.  Also, we believe that the more the cost of water can be made into a variable cost directly related to the amount consumed, the more people will be incentivized toward the right behavior to find solutions to water supply and management challenges.

Currently, many municipalities pay for water in several ways in addition to water bills on a per gallon basis.  Some of these include:

  1. Charging fixed fees within the water bill.
  2. Use of sales tax on retail goods to help pay for water supply projects
  3. Paying for part of the water supply budget with funds from other parts of the municipality.

We at Ecovie advocate charging as much as possible on a per gallon basis with increasing cost per gallon as consumption increases.  The combination of tiered pricing and elimination of subsidies will drive the behavior we need without overburdening any particular groups of the population (apart from water wasters).  This will increase the incentive to use less municipal water through conservation and using alternate water supplies without actually changing the total amount paid for the water.

In general, it seems that water should be priced based upon the marginal cost of providing more water supply and treatment on the waste water and storm sewer side.  The ageing water infrastructure that was implemented across many U.S. cities in the early to mid 20th century is now in need of repair, and municipal service companies are charging heavier prices in part for this necessary renovation.  Ideally this should be completely reflected in the price per gallon of water.

In many cities this is happening even though there is a still a lot of funding from other sources.  In Atlanta, water rates have risen 81% since 2008 to help pay for its sewer upgrades to comply with an EPA consent decree.  At the upper tier, water now costs around 3 cents a gallon including the cost of incoming potable water (28% of price) and sewer charges for sanitary sewer outfall (71% of price).  In rough terms, this works out to around a nickel a flush.  Even so, Atlanta subsidizes the water department by allocating part of the city sales tax to water.  If this subsidy did not exist, estimates are that water rates would rise another 20-30%.

Santa Fe, NM adopted a tiered pricing approach during a big drought about 15 years ago.  The results have been great with capita consumption dropping by over 28%.  Santa Fe also happens to be a bit of a hotbed of rainwater collection.

Coupled with the decaying infrastructure of pumping, treating, and delivering potable water is the fact that almost the entire Southwest and parts of the Midwest are in the midst of a prolonged and historical drought.   While California, according the National Drought Mitigation Center, is undergoing a historically exceptional drought, other areas specifically in the upper and lower Midwest are experiencing moderate drought levels. Below shows an updated visual of the drought situation across the United States.


DroughtMap

Source: www.droughtmonitor.uni.edu

 

California now has a statewide water mandate which calls for a 25% reduction in urban water use over the next year.  This is the first time in the state’s history where California cities and residents have been ordered to reduce water consumption by a fourth.

It would seem that water rates in drought stricken areas should be at least as high as in Atlanta or Santa Fe in order to incentivize conservation and use of alternate water sources.  Looking at water rates of the 50 largest US cities, we can see that this sadly not the case.  Atlanta has the most expensive water in the country.  Here is a comparison of Atlanta rates with rates in California and Arizona (Santa Fe’s rates are even higher than Atlanta’s, but being a smaller city did not make this list):

waterrates

Taken From: http://archive.azcentral.com/opinions/projects/new-arizona/water/

Even San Francisco, which has the third highest rates, still charges 30% less than Atlanta.  Los Angeles charges less than a third and Long Beach charges less than a fourth as much as Atlanta!  We have heard about impending water rate increases in drought stricken areas to help pay for infrastructure upgrades, but rates have a long way to rise before they will have a true incentive toward conservation and alternate sources.

One idea that is being tried in places like Tucson is that part of the water rate is applied to rebates for rainwater collection and conservation measures.  This is a great idea.  Let’s take a look at a few examples to see how this might incentivize adoption of much needed technologies like greywater recycling and rainwater collection.  Let’s assume that water rates are tiered and equal those of Atlanta and that part of the water bill revenue is used to give a modest $2000 rebate for installation of a rainwater or grey water system in residences and 10% of capital cost for commercial scale systems.  We will also look at even higher rates of 4 cents per gallon to reflect the effect of removing subsidies:

Case 1Residential Greywater Recycling

In a drought or low rainfall region like Arizona and California, greywater recycling can have the biggest impact on reduced demand for municipal water.  Here we have a new home being constructed for a typical family of 4.  They decide to install an AQUALOOP greywater system to capture water from the bathroom sinks, laundry, and especially the showers to treat and use for toilet flushing, laundry, with any excess used for outdoor watering.

greywatersystem

  • With all the low flow, water conservation fixtures they are planning to use, their projected water supply from greywater is around 50,000 gallons per year or about 50% of their indoor water use.
  • This equates to a municipal water bill savings of $1500 per year and is around $2000 a year with a 4 cent a gallon water rate.
  • With the $2000 rebate paid from water bill revenue, the fully installed system has an ROI of around 20% and payback of between 5 and 6 years. Not too shabby!  With a  4 cent a gallon water rate, this improves to an ROI of 36% with a 4 year payback.

Case 2 – Commercial Scale Rainwater and Greywater System

A San Francisco Bay area university is building a new recreation center.  They can collect a lot of showering water each day plus the water from the swimming pool backwash which is typically thrown down the drain.  This all accounts for around 8,500 gallon of water per day on average.  In addition, they are collecting around 600 gallons a day from air conditioner condensate  into rainwater collection tanks.  If and when it rains, they will have another 50,000 gallons a year collected from the roof.  All this water is used to flush toilets, do laundry, and irrigate the playing fields.

  • The total water supply from these sources adds up to over 3 million gallons a year of potential water supply.
  • The water bill savings is $97,000 per year at current Atlanta water rates and $134,000 with 4 cent a gallon water.
  • With a 10% capital cost rebate, the ROI works out to over 30% with a 4 year payback. With 4 cent a gallon water, ROI improves to 50% with 3 year payback.

Case 3 Residential Rainwater Collection – Atlanta

Another family of four, this time in Atlanta, decides to take advantage of their new (as of yet hypothetical) rainwater collection rebate program.  This family decides to do a retrofit to provide rainwater for all their indoor and outdoor needs and has an Ecovie potable system installed.

potablesystem

  • With their 3000 square foot roof, we estimate they can supply 75,000 gallons a year of rainwater.
  • Their water bill savings is $2200 per year. With 4 cent a gallon water, the savings would be $3200 annually.
  • With their rebate, the ROI is 14% (better than the stock market) with a 6 year payback. With 4 cent a gallon water, the ROI becomes an impressive 35% with a 4 year payback.

The impact of increased adoption of alternate water supply methods like rainwater collection and grey water recycling could be huge.  With even a modest 10% of all buildings using greywater for non-potable uses and rainwater for potable and non-potable uses, any given municipal area would have tens of millions of gallons per day supplied by alternate sources.  We have estimated that a 30% adoption rate of rainwater collection could supply 100 MGD in metro Atlanta alone.   This would go a long way to solve the water supply and water management challenges we have and would certainly help exceed the municipal water use goals set in California by Governor Brown.

We understand that these water rate levels have a lot of obstacles to overcome to be adopted.   The economic impact of higher water rates need to be compared to the economic cost of running out of water and to other alternatives.  However, the proposal should provide adequate funding for water supply infrastructure even as municipal water consumption per capita drops.

As always, we invite your debate and challenge to these ideas and look forward to exploring more ways to help solve our water management issues.

  1. HELLO BOB,

    YOU ARE ABSOLUTELY RIGHT THAT ON THE MOST PROJECTS THAT IS ROI (RETURN ON INVESTMENT) WHCH IS A GOVERNING FACTOR IN DECISION MAKING. BUT I WONDER IF THIS FACTOR HAS EVER BEEN RECHECKED ON THE EXECUTED PROJECTS, AFTER FEW YEARS, IF THE ASSUMPTIONS MADE WERE EVER CORRECT.

    I THINK RECHECKING ON THE EXECUTED PROJECTS ON THE RAINWATER HARVESTING, TO VERIFY IF THE INITIAL ASSUMPTION ON THE CALCULATION OF ROI WERE EVER CORRECT, COULD BE QUITE EASY TO RESEARCH. HOWEVER, NO ONE QUANTIFIES THE INDIRECT GAINS ON THE RAINWATER HARVESTING AND RUNOFF CONTROL, AS FAR AS ENVIRONMENTAL BENEFITS AND FLOOD CONTROL ARE CONCERNED, ON THE ROI CALCULATION, WHICH HAVE TO BE CONSIDERED.

    SUCH INDIRECT GAINS, HAVE TO BE CONSIDERED BY FELLOW CITIZENS, AS WELL AS AUTHORITIES, IF EVERYONE PONDERING ON THE CATASTROPHE SHOWN ON “visual of the drought situation across the United States,” NOW MONITORED ON: http://droughtmonitor.unl.edu/. IT LOOKS LIKE ACTION TAKEN IS A MUST, BEFORE GETTING TOO LATE, WHEN AND WHERE INITIAL ROI FIGURES WILL NOT BE IMPORTANT, AT ALL.

    BEST REGARDS,

    MASHALLAH

  2. HELLO BOB,

    IN CASE YOUR REPUTABLE FIRM WANTED TO VERIFY THE ROI FIGURE ON AN ALREADY EXECUTED PROJECT ON THE RAINWATER HARVESTING AND ZERO RUNOFF ON A PREMISES, ON WHICH IT IS NOT CONNECTED TO THE MUNICIPALITY WATER AT ALL, AND IT HAS BEEN RUNNING FOR FEW YEARS. YOU MAY CONSIDER MR. LARRY CURRAN ACHIEVEMENTS, VIA VISITING:
    =======================
    http://chooserain.com/
    ====================
    http://www.bing.com/images/search?q=choose+rain&FORM=HDRSC2
    ===========
    THE USA IS A CONTINENT PER SE; FOR SURE ONE COULD REACH TO PEER PROJECTS, AS CHOOSE RAIN’S ONE ELSEWHERE.
    BEST REGARDS,
    MASHALLAH

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