Why doesn't California just raise the price of water?

[Bronzeage]

Ever since the days right after Hurricane Katrina, and all the buzz about living in a city built below sea level, I am mildly amused when other parts of the nation discover they are living in a place which nature did not intend for humans to inhabit.

 

[coloradoatheist]

Ever since the days right after Hurricane Katrina, and all the buzz about living in a city built below sea level, I am mildly amused when other parts of the nation discover they are living in a place which nature did not intend for humans to inhabit.

I don't think the issue is necessarily living there, it's expecting everyone else to pay for the choice to live there. And that has been the case with insurance, electricity, and now water.

 

[James Brown]

Ever since the days right after Hurricane Katrina, and all the buzz about living in a city built below sea level, I am mildly amused when other parts of the nation discover they are living in a place which nature did not intend for humans to inhabit.

Is there any place free from destructive acts of nature?

 

[rousseau]

Ever since the days right after Hurricane Katrina, and all the buzz about living in a city built below sea level, I am mildly amused when other parts of the nation discover they are living in a place which nature did not intend for humans to inhabit.

I've seen a few posts on different sites about water problems recently, and became more curious about it so I did a little searching. Some of what I found hints at the problem you're suggesting: we're coming up with solutions to work against the natural order of the world and geography.

One site I found discussed how the search for clean water in African nations was hindering their ability to educate themselves and develop infrastructure. The problem was framed as 'needless suffering', when realistically almost all life in the world spends a significant portion of their time searching for water. The irony is, as we all know, solving more of these problems actually seem to make things worse in the long term.

 

[Axulus]

Another problem is dynamics. The differential change that you need, over the differential time that it takes. You want water consumption to come down but changing prices will take years or even in some cases decades to do it, in the case of having to develop new technologies, drought resistant crops, or changing consumers preferences to the drought resistant foods, for example.

Higher prices will lower consumption. The questions like always are how much and how fast.

Raising prices is a blind feedback mechanism. Like all feedback mechanisms the further you go and the faster you go you risk instability. Instability is bad, viable businesses go bankrupt, people lose jobs, etc. 2008 all over again

Feedback mechanisms take time to act. They overshoot, over correct. The faster you go the further it will overshoot. The more you suppress the overshooting the longer it takes to correct.

And feedback mechanisms have another drawback, they work on the error between what you want and what you have. Depending on the dynamics of the system and of the corrective mechanism you can have a situation where you are only able to supply a linear correction. This means that you always have to have an error, you are guaranteed of never obtaining your goal. What you want.

Rather than relying on prices to indirectly suppress water consumption through an uncertain feedback mechanism it is better to directly suppress water consumption through direct means, like through regulations. Especially if this is a temporary problem. There is no question that regulations cause distortions in the economy. But this is not necessarily bad. Our need for food is much greater than our need for clean cars and green lawns.

We are not trying to prefect an economic system. We are trying to get an economic system that provides us what we need and what we want.

You are trying to apply a small amount of knowledge to a complex problem, really not more than your belief, your faith that regulations are always bad and the market mechanism is always good.

Now you can go back to your fantasies. I am sorry to intrude on them.

Cutting water usage across the board by 25% is also a mechanism that causes businesses to go bankrupt, risks instability, and gives people no time to adapt and buy new technologies to cope, except the ones that go bankrupt have no relation to the economic value (or lack thereof) they provide. It's also easier to cheat and requires expensive enforcement and a whole bureaucracy to carry out the enforcement.

You seem to assume there is some magical alternative that has few downsides.

 

[ronburgundy]

Relying primarily upon use regulations only make sense for homes and business for whom water is not a primary aspect of their produced product. For agriculture, it is simply too impractical and costly, because to do it in any way that limits true waste requires that every type of crop have a different limit and that limit vary with local climate and soil, and varies with each years changing climate. It takes different amounts of water. How much water is wasteful, depends completely upon the amount of water need for what is being grown, the nutritional yield and neccessity of that crop, where it being grown, how much rain there has been, available options for other locations, etc..

It is absurdly inefficient and doesn't target the problem to just have blanket limits per acre, and more nuanced crop, place, and climate specific limits are massively costly to both create and enforce. Price per actual usage makes more sense with agriculture, even if some regulation is also involved, such as to ban waste on needless luxury crops (such as golf grass) that rich people are willing to pay a premium for and thus price per use will not curtail. IOW, some uses should be banned regardless if someone wants to pay for it.

 

[Jimmy Higgins]

But even with regulations you have the problems of measurement of enforcement and that's just trying to do what the price signal of water would do if it goes up and people have to pay for what it really costs to get the water.

Then set the price of water at an exponential rate.

 

[coloradoatheist]

But even with regulations you have the problems of measurement of enforcement and that's just trying to do what the price signal of water would do if it goes up and people have to pay for what it really costs to get the water.

Then set the price of water at an exponential rate.

There could be tiered pricing for water.

 

[arkirk]

Another problem is dynamics. The differential change that you need, over the differential time that it takes. You want water consumption to come down but changing prices will take years or even in some cases decades to do it, in the case of having to develop new technologies, drought resistant crops, or changing consumers preferences to the drought resistant foods, for example.

Higher prices will lower consumption. The questions like always are how much and how fast.

Raising prices is a blind feedback mechanism. Like all feedback mechanisms the further you go and the faster you go you risk instability. Instability is bad, viable businesses go bankrupt, people lose jobs, etc. 2008 all over again

Feedback mechanisms take time to act. They overshoot, over correct. The faster you go the further it will overshoot. The more you suppress the overshooting the longer it takes to correct.

And feedback mechanisms have another drawback, they work on the error between what you want and what you have. Depending on the dynamics of the system and of the corrective mechanism you can have a situation where you are only able to supply a linear correction. This means that you always have to have an error, you are guaranteed of never obtaining your goal. What you want.

Rather than relying on prices to indirectly suppress water consumption through an uncertain feedback mechanism it is better to directly suppress water consumption through direct means, like through regulations. Especially if this is a temporary problem. There is no question that regulations cause distortions in the economy. But this is not necessarily bad. Our need for food is much greater than our need for clean cars and green lawns.

We are not trying to prefect an economic system. We are trying to get an economic system that provides us what we need and what we want.

You are trying to apply a small amount of knowledge to a complex problem, really not more than your belief, your faith that regulations are always bad and the market mechanism is always good.

Now you can go back to your fantasies. I am sorry to intrude on them.

Axulus only has a hammer. His faith is that all problems are nails...that need to be driven into the lives of the poor. We need to regulate the use of water and not send it to a marketplace where some will come up wanting....er needing something they cannot afford.

 

[Axulus]

Another problem is dynamics. The differential change that you need, over the differential time that it takes. You want water consumption to come down but changing prices will take years or even in some cases decades to do it, in the case of having to develop new technologies, drought resistant crops, or changing consumers preferences to the drought resistant foods, for example.

Higher prices will lower consumption. The questions like always are how much and how fast.

Raising prices is a blind feedback mechanism. Like all feedback mechanisms the further you go and the faster you go you risk instability. Instability is bad, viable businesses go bankrupt, people lose jobs, etc. 2008 all over again

Feedback mechanisms take time to act. They overshoot, over correct. The faster you go the further it will overshoot. The more you suppress the overshooting the longer it takes to correct.

And feedback mechanisms have another drawback, they work on the error between what you want and what you have. Depending on the dynamics of the system and of the corrective mechanism you can have a situation where you are only able to supply a linear correction. This means that you always have to have an error, you are guaranteed of never obtaining your goal. What you want.

Rather than relying on prices to indirectly suppress water consumption through an uncertain feedback mechanism it is better to directly suppress water consumption through direct means, like through regulations. Especially if this is a temporary problem. There is no question that regulations cause distortions in the economy. But this is not necessarily bad. Our need for food is much greater than our need for clean cars and green lawns.

We are not trying to prefect an economic system. We are trying to get an economic system that provides us what we need and what we want.

You are trying to apply a small amount of knowledge to a complex problem, really not more than your belief, your faith that regulations are always bad and the market mechanism is always good.

Now you can go back to your fantasies. I am sorry to intrude on them.

Axulus only has a hammer. His faith is that all problems are nails...that need to be driven into the lives of the poor. We need to regulate the use of water and not send it to a marketplace where some will come up wanting....er needing something they cannot afford.

Are you wearing selective reading glasses? You must have missed this part:

But the revenue from a higher price could be rebated to consumers on a lump-sum basis, making the whole system progressive. We would end up with more efficiency and more equality.

 

[arkirk]

Axulus only has a hammer. His faith is that all problems are nails...that need to be driven into the lives of the poor. We need to regulate the use of water and not send it to a marketplace where some will come up wanting....er needing something they cannot afford.

Are you wearing selective reading glasses? You must have missed this part:

But the revenue from a higher price could be rebated to consumers on a lump-sum basis, making the whole system progressive. We would end up with more efficiency and more equality.

Water distribution is not the same as revenue distribution. Rebating the revenue removes all significance of the action you take. There really is no reason to put water into the market at an artificially high price then give back the money...unless some will get less than others...then you are tampering with your sacred market model and undoing any alleged positive effect it may have.

It would be important to spend the increased revenues in efforts to procure more water. This, in a finite water environment just makes your exercise one of poor people waiting for their money back....fat chance of that!

 

[coloradoatheist]

Are you wearing selective reading glasses? You must have missed this part:

But the revenue from a higher price could be rebated to consumers on a lump-sum basis, making the whole system progressive. We would end up with more efficiency and more equality.

Water distribution is not the same as revenue distribution. Rebating the revenue removes all significance of the action you take. There really is no reason to put water into the market at an artificially high price then give back the money...unless some will get less than others...then you are tampering with your sacred market model and undoing any alleged positive effect it may have.

It would be important to spend the increased revenues in efforts to procure more water. This, in a finite water environment just makes your exercise one of poor people waiting for their money back....fat chance of that!

Except it would be progressive so people who qualify would get a water rebate so they are paying what they did before or even less. There are other things they can do.

 

[Axulus]

Are you wearing selective reading glasses? You must have missed this part:

But the revenue from a higher price could be rebated to consumers on a lump-sum basis, making the whole system progressive. We would end up with more efficiency and more equality.

Water distribution is not the same as revenue distribution. Rebating the revenue removes all significance of the action you take. There really is no reason to put water into the market at an artificially high price then give back the money...unless some will get less than others...then you are tampering with your sacred market model and undoing any alleged positive effect it may have.

It would be important to spend the increased revenues in efforts to procure more water. This, in a finite water environment just makes your exercise one of poor people waiting for their money back....fat chance of that!

You don't get a rebate for the amount you pay - everyone gets a flat and equal rebate whether they paid for 1 million gallons or 10 gallons. That does not undo the positive effect of getting people to conserve water and allocating it towards its highest value uses.

 

[Jimmy Higgins]

So a person using 1 million gallons gets a $60 check?

Also, if you can't afford the higher rate, how does a rebate help? That comes after the fact. And if you streamline it (month to month), they'll never notice and won't use less water.

 

[Axulus]

So a person using 1 million gallons gets a $60 check?

Whatever the total amount of additional revenue raised dividend by the number of people living in CA is, that's how much you get back. If everyone has to pay an average of $40 additional per month, then everyone gets a $40 monthly credit on their water bill.

Also, if you can't afford the higher rate, how does a rebate help?

You will be able to afford it so long as you don't use more water than the average usage across the entire state. If you use less than the average, you'll earn extra.

That comes after the fact.

No, it needn't do so. Monthly water bill: $100 usage. Statewide credit: $40. Net payment due: $60.

Or: Monthly water bill: $30 usage. Statewide credit: $40. Payment due to you: $10.

And if you streamline it (month to month), they'll never notice and won't use less water.

Then you keep raising the price until people take notice and start cutting back and you reach the desired amount of monthly usage. The only ones affected negatively from a financial standpoint, no matter the price, are those that use more than the statewide average per person use. And, remember, this includes the businesses that use lots of water, including golf courses, farming, etc., as part of the average calculation. If a poor person is using more than the state average per person even when you include farming, golf courses, and all the rich people, then they seem to be unnecessarily wasteful and need to find ways to cut back.

 

[Jimmy Higgins]

Whatever the total amount of additional revenue raised dividend by the number of people living in CA is, that's how much you get back. If everyone has to pay an average of $40 additional more per month, then everyone gets a $40 monthly check.

My spidey sense is tingling. My mind is saying the math doesn't work for that. That the average rebate, based on the average extra spent would greatly benefit residential accounts, a lot. Goodness I need to get a hobby!

80% of water is usage is industrial, so just doing a quick run of the numbers. Average household use in California is about 362 gpd (from wiki). There are about 13,000,000 households in California (from census). This leads to 1.7e+12 gallons a year. Households only use 20% for the state, so that means business's/farms use 4 times that at 6.9E+12 gallons a year.

Assuming water costs $0.002 per gallon (from google) that means household usage is $3.4E+9 and Industrial/whatever is $14E+9 a year. If you double the price, you make the same amount in bulk. Assuming 13,000,000 households and 1,000,000 businesses (doubt its that high), the average rebate for the increase is $1225. The increase for the average household was only $264. Unless my math is busted, which it may be, your plan would need a little tweaking. I want to say weighted averages are boning your plan.

Also, if you can't afford the higher rate, how does a rebate help?

You will be able to afford it so long as you don't use more water than the average usage across the entire state. If you use less than the average, you'll earn extra.

But you have to pay up front. If you are barely making it by, you can't afford the increase.

That comes after the fact.

No, it needn't do so. Monthly water bill: $100 usage. Statewide credit: $40. Net payment due: $60.

Where is the incentive then to use less water then? If you never actually pay more, there is no incentive.

 

[Axulus]

My spidey sense is tingling. My mind is saying the math doesn't work for that. That the average rebate, based on the average extra spent would greatly benefit residential accounts, a lot. Goodness I need to get a hobby!

80% of water is usage is industrial, so just doing a quick run of the numbers. Average household use in California is about 362 gpd (from wiki). There are about 13,000,000 households in California (from census). This leads to 1.7e+12 gallons a year. Households only use 20% for the state, so that means business's/farms use 4 times that at 6.9E+12 gallons a year.

Assuming water costs $0.002 per gallon (from google) that means household usage is $3.4E+9 and Industrial/whatever is $14E+9 a year. If you double the price, you make the same amount in bulk. Assuming 13,000,000 households and 1,000,000 businesses (doubt its that high), the average rebate for the increase is $1225. The increase for the average household was only $264. Unless my math is busted, which it may be, your plan would need a little tweaking. I want to say weighted averages are boning your plan.

Also, if you can't afford the higher rate, how does a rebate help?

You will be able to afford it so long as you don't use more water than the average usage across the entire state. If you use less than the average, you'll earn extra.

But you have to pay up front. If you are barely making it by, you can't afford the increase.

That comes after the fact.

No, it needn't do so. Monthly water bill: $100 usage. Statewide credit: $40. Net payment due: $60.

Where is the incentive then to use less water then? If you never actually pay more, there is no incentive.

You pay more or get less money back the more you use, in direct proportion to the amount you use. That's the incentive. The credit you receive has no bearing on the amount you yourself used, but is rather calculated based on how much everyone in the state used and the associated additional charges resulting from that usage.

As far as the specific amounts households get back, I'm not sure on that, I'm just throwing up numbers in the air. Yes, the residential households would be net beneficiaries of this, and the industrial uses, the biggest water hogs, would both pay the most and also likely end up cutting back the most. Doesn't mean that we wouldn't see household behavior also change as time goes on, in order to reduce their own water bills.

 

[arkirk]

My spidey sense is tingling. My mind is saying the math doesn't work for that. That the average rebate, based on the average extra spent would greatly benefit residential accounts, a lot. Goodness I need to get a hobby!

80% of water is usage is industrial, so just doing a quick run of the numbers. Average household use in California is about 362 gpd (from wiki). There are about 13,000,000 households in California (from census). This leads to 1.7e+12 gallons a year. Households only use 20% for the state, so that means business's/farms use 4 times that at 6.9E+12 gallons a year.

Assuming water costs $0.002 per gallon (from google) that means household usage is $3.4E+9 and Industrial/whatever is $14E+9 a year. If you double the price, you make the same amount in bulk. Assuming 13,000,000 households and 1,000,000 businesses (doubt its that high), the average rebate for the increase is $1225. The increase for the average household was only $264. Unless my math is busted, which it may be, your plan would need a little tweaking. I want to say weighted averages are boning your plan.

Also, if you can't afford the higher rate, how does a rebate help?

You will be able to afford it so long as you don't use more water than the average usage across the entire state. If you use less than the average, you'll earn extra.

But you have to pay up front. If you are barely making it by, you can't afford the increase.

That comes after the fact.

No, it needn't do so. Monthly water bill: $100 usage. Statewide credit: $40. Net payment due: $60.

Where is the incentive then to use less water then? If you never actually pay more, there is no incentive.

You pay more or get less money back the more you use, in direct proportion to the amount you use. That's the incentive. The credit you receive has no bearing on the amount you yourself used, but is rather calculated based on how much everyone in the state used and the associated additional charges resulting from that usage.

As far as the specific amounts households get back, I'm not sure on that, I'm just throwing up numbers in the air. Yes, the residential households would be net beneficiaries of this, and the industrial uses, the biggest water hogs, would both pay the most and also likely end up cutting back the most. Doesn't mean that we wouldn't see household behavior also change as time goes on, in order to reduce their own water bills.

People with plenty of money would go ahead and use the water as they pleased. People who were barely getting by would not be able to do that....rebate or no. There is no reason to give the water vendor the distinction of being a holder of everybody's money. Regulation makes sense...direct regulation....no speculative money fix.

 

[Bronzeage]

There is a fundamental difference between municipal and agricultural water consumption, which has a great bearing on this problem.

Agricultural irrigation, no matter what method is used, returns 100% of the water to the hydrological cycle and for all practical purposes, it's gone forever, or at least until it rains, again.

A very large percentage of municipal water becomes surface water, after sewage treatment. Except for watering lawns and golf courses, almost all municipal water goes into the sanitary sewer system and can be reused for various purposes, such as watering lawns and golf courses.

There are currently some places where a parallel sewer system is used, which keeps the drainage from sinks, showers, clothes washers, separate from toilets. Recreational vehicles have had similar systems for years, euphemistically labeling the waste tanks as "gray water" and "black water." This greatly reduces the expense of sewage treatment, because if the proper biodegradable detergents are used, gray can be safely used for irrigation.

 

[Jimmy Higgins]

My spidey sense is tingling. My mind is saying the math doesn't work for that. That the average rebate, based on the average extra spent would greatly benefit residential accounts, a lot. Goodness I need to get a hobby!

80% of water is usage is industrial, so just doing a quick run of the numbers. Average household use in California is about 362 gpd (from wiki). There are about 13,000,000 households in California (from census). This leads to 1.7e+12 gallons a year. Households only use 20% for the state, so that means business's/farms use 4 times that at 6.9E+12 gallons a year.

Assuming water costs $0.002 per gallon (from google) that means household usage is $3.4E+9 and Industrial/whatever is $14E+9 a year. If you double the price, you make the same amount in bulk. Assuming 13,000,000 households and 1,000,000 businesses (doubt its that high), the average rebate for the increase is $1225. The increase for the average household was only $264. Unless my math is busted, which it may be, your plan would need a little tweaking. I want to say weighted averages are boning your plan.

Also, if you can't afford the higher rate, how does a rebate help?

You will be able to afford it so long as you don't use more water than the average usage across the entire state. If you use less than the average, you'll earn extra.

But you have to pay up front. If you are barely making it by, you can't afford the increase.

That comes after the fact.

No, it needn't do so. Monthly water bill: $100 usage. Statewide credit: $40. Net payment due: $60.

Where is the incentive then to use less water then? If you never actually pay more, there is no incentive.

You pay more or get less money back the more you use, in direct proportion to the amount you use. That's the incentive. The credit you receive has no bearing on the amount you yourself used, but is rather calculated based on how much everyone in the state used and the associated additional charges resulting from that usage.

I understand. My quick run of the numbers looked at the total aggregate, the value of the increased price and divided by 14,000,000 (13 mil households, 1 million businesses).

As far as the specific amounts households get back, I'm not sure on that, I'm just throwing up numbers in the air.

As an FYI, the numbers I gave you, unless someone can show a bust, aren't analogous, but real and what your plan would pay out in the end. Personally, getting a $1000+ check from the water company would be a welcomed thing... maybe not as much for businesses though.

Yes, the residential households would be net beneficiaries of this, and the industrial uses, the biggest water hogs, would both pay the most and also likely end up cutting back the most. Doesn't mean that we wouldn't see household behavior also change as time goes on, in order to reduce their own water bills.

According to your plan, people could afford to use 4 times the amount of water and break even.

- - - Updated - - -

There is a fundamental difference between municipal and agricultural water consumption, which has a great bearing on this problem.

Agricultural irrigation, no matter what method is used, returns 100% of the water to the hydrological cycle and for all practical purposes, it's gone forever, or at least until it rains, again.

A very large percentage of municipal water becomes surface water, after sewage treatment. Except for watering lawns and golf courses, almost all municipal water goes into the sanitary sewer system and can be reused for various purposes, such as watering lawns and golf courses.

There are currently some places where a parallel sewer system is used, which keeps the drainage from sinks, showers, clothes washers, separate from toilets.

Where? I have never heard of that. The best I've heard are places that don't mix sewer with stormwater lines.

Recreational vehicles have had similar systems for years, euphemistically labeling the waste tanks as "gray water" and "black water." This greatly reduces the expense of sewage treatment, because if the proper biodegradable detergents are used, gray can be safely used for irrigation.

This must be a SW USA thing.