We all know that supply and demand are the fundamentals of Economics 101. When there is a shortage, prices tend to go up. When prices go up, fewer people participate and this equalizes the pressure on scarcity until prices return to normal. But what happens when there is a water shortage and prices stay the same? What can compel people to save water other than perhaps guilt or appealing to their inner sense of doing the right thing? Easier said than done with human beings, I’m just saying.
Not long ago I read an interesting article in a local newspaper, Camarillo Acorn, on October 17, 2014 titled; “Incumbent’s platform includes conserving water, balancing housing needs,” by Stephanie Guzmán, who spoke about a local city council member who made it her top issue on the campaign trail, and note account that this is a small city in California, a region severely affected by drought. .
In Camarillo California their problems are like any other city in the United States within a drought region. You can only do so much publicity, so many advertisements and so much education of the population. After that, you must resort to punishment with higher rates, tiered prices, or fines for people who use too much water. But who’s to say how much is too much?
If we average the amount of water used in, say, a neighborhood and look for those that use more than the average, we can immediately run into serious problems. A household may have only one person living in it, and at the end of the block there is a house with six people. Obviously, the house with six people would probably use more water inside the house than the one with only one person living in it. There were only more flushes from toilets, showers, cooking, and other uses of water such as dishwashers and clothes washers.
The price of water absolutely affects the use of consumption in a very profound way. Here in California, sod farms are selling very little due to the drought situation, no one wants to put in more sod, due to water usage costs and drought restrictions. With 3-tier pricing, homeowners and businesses that exceed the quota are charged very high rates as a penalty. It’s amazing how quickly they change their water use behavior!
Penalty pricing is one idea, the other is to increase unit costs and then use the extra money to upgrade and educate users: businesses, agriculture, homeowners. There is a great TED talk on this and many wonderful research articles on this proven strategy (Google Scholar).
The price can prevent the excessive use of water and change the behavior of people. In fact, it may be the only way to do it responsibly, even if it hurts those who may have less money than other people. This is a very controversial and hotly debated topic, especially in the age where everyone is screaming about equality. Please consider all of this and think about it in 2015.