Wednesday, July 8, 2015

Driving Conservation: Consumer Water Credits Trading

As the drought in California drags on, the State of California as well as water companies are searching for ways to convince people to continue to conserve that don’t involve simply raising rates or imposing draconian fines and penalties. One way to do that may be the implementation of trading water credits at the consumer level.
Currently, California residents are staring water allocations in the face based on their 2013 usage.  Depending upon how much they and their neighbors have used in the past on a per capita basis, they could be looking at having to cut back anywhere from 4% to 36% from those 2013 numbers.  But what if I have an easier time conserving than my neighbor and reduce my water use by more than required.  Or what if my household in 2013 consisted of me, my wife, and three teenagers who seemed to live half their life in the shower and who have now gone off to college, meaning my water use has already fallen off a cliff, even if my tuition bills haven’t.  If I cut back a whopping 50% based on my 2013 water usage, all I’m likely to get for it is a lower water bill – maybe.  Not even an “Atta boy!” from the water company or Governor Brown. That’s not a great incentive to do more than I absolutely, positively have to, and in fact might be a negative incentive to make sure I don’t do more than required.  And for businesses, forced conservation could result in a decline in revenues and loss of market share, while not conserving could result in tremendous additional costs that eat away at already meager profits.  A definite lose – lose.
So what’s the answer? I’m sure there is more than one, but it could be that allowing individual water consumers to participate in water credit trading on a limited basis could drive conservation to levels not even seen in the wildest dreams of Felicia “Lawn Terminator” Marcus.  How might that work?  Say, with my three teenagers safely off at school, my wife and I use 5,000 gallons per month less than our allocation.  We should be able to “sell” the right to use that water to another individual or business.  That individual or business could then buy those 5,000 gallons from the water company at the normal rate plus a small fee, without any additional penalties even if it were above their allocation.  I, in turn, would get a credit on my next bill equal to that small fee paid by the user.  If you really wanted to go all free market, you could even let the level of that fee float and be determined by what the market would bear.

Granted this is an over-simplification, and many of you will point out flaws, not the least of which is that it’s a complicated structure for the water company to keep track of.  So now instead of hearing about the flaws, how about we hear from some of you on how to make it work. Or let’s hear about your completely out of the box ideas on how to drive conservation.  There really are no wrong answers, only starting points.