Saving Water Makes Cents

Water Efficiency Efforts Have Potential to Save Hundreds for Households and Millions for Communities, But Equity and Access Issues Must be Addressed

By Heather Cooley, Morgan Shimabuku, and Dr. Christine DeMyers

Key takeaways

For the past 30 years, water rates in the United States have risen faster than inflation and all other utility rates, adding to the struggle faced by millions of people across the nation to pay water and sewer bills.
More efficient devices and climate-appropriate plants can immediately cut household utility costs by hundreds of dollars annually, reducing the financial burden of water access.
Water efficiency is also frequently the least expensive source of new water for communities. Water efficiency investments reduce the need for expensive new water and wastewater infrastructure, saving communities hundreds of millions and in some instances billions of dollars in capital costs and millions more in annual operating costs.
A major equity issue remains, as lower-income households face barriers to access water efficiency programs. More work is needed to ensure full and equitable access.

Water efficiency supports affordability for households and the larger community

People across the United States are struggling to pay their water and wastewater bills. While water isn’t always the largest utility bill for US households, over the past 30 years, water rates have risen faster than inflation and other utility costs. This rising trend is expected to continue due to deferred maintenance, emerging contaminants, climate change, and the rising costs of construction among other factors.

A new Pacific Institute white paper, “Advancing Affordability through Water Efficiency,” finds water conservation and efficiency improvements improve water affordability for both conserving households and the larger community. Using national data on utility rates, the study shows that reductions in household water use provide an immediate reduction in water bills and, in some instances, wastewater and energy bills for the conserving household. Because water efficiency is typically less expensive than developing new supplies, case studies from the western United States show that water efficiency also helps utilities avoid the need to build expensive new water and wastewater infrastructure, resulting in lower utility bills and connection fees for the broader community over the long term.

Water affordability for conserving households

Water efficiency measures can result in an immediate reduction in household water bills and, for certain measures, wastewater and energy bills. Replacing old, inefficient devices inside the home, including showerheads, clothes washers, and toilets, could cut a household’s utility bills by $242 to $408 per year. For those homes with grass in hot, dry areas, installing plants suited to the local climate could provide additional savings on water bills. These savings are based on national average rates for water, wastewater, and energy and would be even larger for those living in communities with higher utility rates.

Importantly, for some measures, energy bill savings can be significant – even greater than water and wastewater bill savings. A WaterSense-labeled showerhead, for example, is estimated to reduce household water use and wastewater production by 2,700 gallons per year. Using national average water and wastewater rates, this translates to a savings of $16 per year on water bills and $19 per year on wastewater bills. But showerheads save hot water – and the energy required to heat that water. We estimate that household energy bill savings for a WaterSense-labeled showerhead can be $30 per year!

“A more-efficient showerhead alone can save $16 in water, $19 in wastewater, and $30 in energy bills annually.”

Water affordability for the larger community

Water efficiency can also provide long-term cost savings for the larger community by delaying or eliminating the need for new, costly water supply and treatment infrastructure—costs that would be passed on to a utility’s customers. The report examines long-term cost savings by synthesizing results from several recent avoided cost analyses from the Alliance for Water Efficiency. These analyses compare a conserving scenario (i.e., the cost of water with efficiency measures in place) to a non-conserving scenario (i.e., the cost of water without efficiency measures in place).

“Water efficiency typically represents the least expensive source of new water for communities.”

The water and wastewater costs avoided by water efficiency vary from community to community. For example, in Gilbert, Arizona – a small but rapidly growing town near Phoenix – water conservation and efficiency reduced water use from 244 gallons per person per day (gpcd) in 1997 to 173 gpcd in 2015. This reduction in water use resulted in savings of $341 million in capital costs for water and wastewater infrastructure and an additional $3.67 million per year in operating costs. In the absence of water efficiency, combined water and wastewater bills would have been 6.1% higher (averaging $657 compared to $619 per year) and connection fees 82% higher ($17,000 compared to $9,500 per connection).

Los Angeles has seen even greater cost savings from water efficiency improvements. There, per capita water use declined from 180 gpcd in the early 1990s to just 110 gpcd in 2016, avoiding additional water supply, treatment, and pumping costs totaling more than $11 billion. In the absence of water conservation and efficiency, customer water bills would have been more than 36% higher. Comparable levels of wastewater savings were also realized.

Making water conservation and efficiency programs accessible to everyone

While all households benefit from water efficiency improvements, the greatest cost savings are provided to conserving households. Yet, studies show that customers and households from lower income brackets and other hard-to-reach groups, such as renters, are less likely to participate in conservation and efficiency programs. This is because most utility-sponsored efficiency programs are focused on owner-occupied, single-family households with disposable income. For example, rebate programs require participants to pay the up-front cost for the more efficient device before receiving any monetary compensation, which can take several months. These programs are cost prohibitive for households that cannot afford the up-front investment. Greater effort is needed to ensure water conservation and efficiency programs are accessible to everyone, including low-income households, renters, and those in multi-family housing.

Recommendations

The findings from the report can inform policy decisions at the utility scale up to the federal level. For greater water efficiency and, thus, greater cost savings for all, the report recommends:   

Increase investments in water efficiency improvements. Water efficiency typically represents the least expensive source of new water and can help to improve community water affordability. Yet, funding for water efficiency is far less than for other sources of new supply. Federal, state, and local governments should increase investments in water efficiency to levels commensurate with other water supply options.
Design water efficiency programs to be accessible to customers in lower income households. For example, utilities can provide vouchers for discounts on water efficient devices upon sale, rather than offer rebates weeks or even months after purchase. Another approach is to provide fixtures and appliances at no cost to qualified households through device giveaways and direct-install programs. This program in Seattle, for instance, offers free water-saving toilets for income-qualified homeowners. Free leak detection services for income-qualified households can also help reduce water bills by catching leaks. For instance, in Sacramento, the Leak Free Sacramento program helps low-income residents make water repairs that increase efficiency free of charge. Utilities can also offer mechanisms to deliver conservation-related cost savings to renters. Finally, as illustrated in this report from River Network and the WaterNow Alliance, partnerships with community-based organizations help utilities build trust and overcome cultural barriers.   
Improve communications about the costs avoided by water efficiency improvements. Several studies sponsored by the Alliance for Water Efficiency have used avoided cost analyses to powerfully communicate the utility- and community-wide scale of monetary savings associated with water efficiency improvements. Water suppliers should develop and periodically update avoided cost analyses to share this information with ratepayers and elected officials. This will help increase public support for conservation and efficiency investments and programs.
Improve demand forecasting to avoid building unnecessary and costly new water supply and treatment infrastructure. Accurate demand forecasts are essential for fully realizing the benefits of water efficiency improvements. Yet, water suppliers routinely overestimate demand by forecasting that water demand will increase when it remains unchanged or even declines. Forecasters should regularly examine water-use trends, assumptions within their models, and the accuracy of past projections, and adjust their models as needed.

Increasing water efficiency is a proven strategy for stretching limited water resources. The Pacific Institute’s new white paper, “Advancing Affordability through Water Efficiency,” highlights the role water efficiency can play in advancing affordability for conserving households and the broader community. It also underscores the critical importance of designing efficiency programs that are fully and equitably accessible to all.