California Has Major Drinking Issues

The state needs more aggressive pricing to manage its water supply
Illustration by Bloomberg View

California has at least an additional five months of drought ahead, U.S. forecasters estimate, putting new pressure on everyone to conserve already stretched water supplies. While farms use 80 percent of the state’s water—and it’s essential that they cut back—cities and towns have to do their share.

The good news is that officials already know how to get people to use less water. The bad news is that too few of them have acted aggressively enough. If the drought ends before they do take action (forecasters say wet El Niño weather could return next winter), the problems will only be worse during the next shortage.

One effective strategy is to raise the price of water as people use more and more of it. Low prices are charged for the amount most families need for drinking, bathing, and washing dishes and clothes. Higher prices are levied for more discretionary use, mostly for watering the lawn. And use above that level is priced prohibitively.

Two-thirds of California water agencies follow this approach. Some, including San Diego and Watsonville, have even adopted additional upper price tiers, further ramping up costs for the biggest users. Cities and towns with tiered pricing may need to boost the prices on their middle and high tiers to get their biggest users to conserve without adding to the burden of responsible users.

Another strategy, adopted by California American Water in Los Angeles County, is to raise prices in the summer, when water is low and demand is high, and let them drop in the winter. That approach can be used by itself or, better yet, coupled with price tiers.

For pricing signals like these to change behavior, however, they need to be imposed in real time via people’s monthly water bills. Some water agencies still rely on bimonthly or quarterly bills, because it’s too expensive to send someone out to read the meters every month. The answer here is automated meters, which are already used in San Francisco, though other parts of California have been slower to adopt them. The new meters are expensive—but so is trucking in water during a drought. Another idea that is effective is to pay people to replace their lawns with plants that don’t need as much water. “Cash for grass” is offered in Los Angeles County and elsewhere. More communities should do so and experiment with bigger incentives.

Rules help, too, of course: everything from regulations mandating water efficiency—California was the first state to require low-flow toilets for all renovated homes—to rationing during droughts. But market incentives need to be a bigger part of the picture. The best argument for more aggressive pricing is that it might preempt draconian restrictions when water shortages are severe. California water managers need to use the water-saving tools they already have with greater force and, where necessary, keep using them when the drought ends.

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