GLIN==> New research explores true cost of water in the Great Lakes basin, how pricing can be used as incentive to conserve

For immediate release: November 9, 2011

 

New research explores true cost of water in the Great Lakes basin, how
pricing can be used as incentive to conserve 
http://www.glc.org/announce/11/11vglwi.html 

 

Ann Arbor, Mich. – As plentiful as water is in the Great Lakes region, the
cost to deliver it to consumers is creeping up and should be reflected more
accurately in bills to encourage conservation, according to recommendations
made in a new Great Lakes Commission report.

 

The “Value of Great Lakes Water Initiative” was an 18-month project
supported by the Great Lakes Protection Fund to investigate how public water
is priced in the Great Lakes region and whether price could be used as a
water resource management tool to change consumer behavior for more
efficient water use.

 

The Initiative focused on three primary issues: 1) how energy costs factor
into water bills; 2) whether the cost of providing water to consumers is
fully transparent; and 3) if an efficiency-oriented revenue structure would
change water use in the Great Lakes basin.

 

“Water has historically been undervalued in the Great Lakes region because
of its abundance,” said Jeffrey Ripp of the Public Service Commission of
Wisconsin, a technical adviser to the project. “However, the cost of
delivering safe and reliable water continues to increase and many have
concerns about the long-term sustainability of Great Lakes water. The
results of this project will help communities price water in a way that
reflects its value to the region’s economy and environment.”

 

A survey and economic analysis by Michigan State University (MSU) of the
largest municipal water systems in the Great Lakes states found that utility
expenses have climbed some 25 percent on average, mainly due to the rise in
costs for infrastructure and operations. To make up for the costs, water
rates are generally going up, and many public water systems are providing
information about conservation to their customers and even introducing
special, efficiency-oriented rates. These rates are designed to encourage
the customer to use their water more wisely. Typically, the price of water
increases as the customer consumes more water. 

 

Dr. Janice Beecher of MSU, who led the survey, noted that “even in this
water-abundant region, there is a growing recognition that cost-based water
pricing plays a central role in prudent resource management and long-term
sustainability.” Cost-based water pricing means setting a price per unit of
water to cover the costs of providing the water (e.g., pumping, treating and
delivering the water to the customer).

 

The Initiative engaged utility managers and local officials in a series of
four workshops to discuss the impacts of water rates using the Initiative’s
Water Pricing Primer on the basic principles of different water rates and
how they can be used to achieve various water management goals. Also
discussed were the political, institutional and economic barriers to using
price to achieve water conservation goals. Such barriers include lack of
political will; resistance to change; lack of consumer education on why
rates need to increase; media unwillingness to research all the facts; and
opposing agendas between management and elected officials.

 

While interest exists in efficiency-oriented rate structures, according to
participants, without help, fear of revenue loss discourages their adoption.


 

Mary Ann Dickinson, president and CEO of the Alliance for Water Efficiency,
who conducted the workshops, said: "Water utilities throughout the region
are struggling with recouping costs of doing business in an economic
recession and need help designing rates. The Water Pricing Primer is a
positive step in this direction.”

 

Tim Eder, executive director of the Great Lakes Commission, added: “Great
Lakes communities will benefit from pricing water at its true costs and
educating the public on its value.”

 

A team of experts assembled for the Initiative used results from the water
system survey and the workshops to make 17 recommendations for advancing
water pricing to achieve both economic viability for the utility and
environmental sustainability of the water resource. These, along with the
full project report, can be accessed at www.glc.org/wateruse/watervalue. 

 

Principal partners with the Great Lakes Commission in the “Value of Great
Lakes Water Initiative” included the Alliance for Water Efficiency, MSU
Institute for Public Utilities and the Alliance for the Great Lakes.

 

 

Contact: Becky Pearson

Email: bpearson at glc.org 

Office: 734-971-9135

 

 

### 

 

The Great Lakes Commission, chaired by James Tierney (NY), assistant
commissioner for water resources at the New York State Department of
Environmental Conservation, is an interstate compact agency established
under state and U.S. federal law and dedicated to promoting a strong
economy, healthy environment and high quality of life for the Great
Lakes-St. Lawrence region and its residents. The Commission consists of
governors' appointees, state legislators, and agency officials from its
eight member states. Associate membership for Ontario and Québec was
established through the signing of a "Declaration of Partnership." The
Commission maintains a formal Observer program involving U.S. and Canadian
federal agencies, tribal authorities, binational agencies and other regional
interests. The Commission offices are located in Ann Arbor, Michigan. Learn
more at www.glc.org.

 

 

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