Category: Water Supply

Videos: How Should We Price Water?

Most of us probably know the average price for a bottle of water, but do you know how much you’re charged for water coming out of your tap? The price of water—which can have ripple effects throughout our communities, the economy, and the environment—may not be typical water-cooler conversation, but understanding it is essential to addressing key water-management challenges.

We interviewed Ken Baerenklau, a UC Riverside economist and adjunct fellow with the PPIC Water Policy Center, on the role of pricing to mitigate scarcity during droughts, and the need for fair and economically sensible prices. As Baerenklau notes, it can be hard to get pricing right—but critically important that we do. These short videos produced with Marjorie Gelin Goodwin offer an introduction to some key issues that drive the price of water.

Balancing act: The price vs. value of water
Competing goals: The challenges of using pricing to reduce water use

Visit the PPIC Water Policy Center’s resource page on drought and water supply

Reducing the Costs of Drought: Lessons from Australia

What do droughts in California and Australia have in common, and what lessons from Down Under are best-suited to managing mega-droughts here? At a recent conference of agricultural economists, Americans and Australians shared their experiences and research on the topic.
The meeting covered what worked well—and what did not—in managing Australia’s Millennium Drought, which lasted from 1997-2009. The “worked well” list included: water conservation in urban areas, water pricing, and cooperative governance among water managers. The Australians also depended heavily on water markets to reduce the costs of their mega-drought. The flexibility and autonomy offered by water trading helped communities allocate water quickly and efficiently to competing uses, and also provided an effective way to recover it for the environment.
Several researchers noted that water trading is an important drought response that deserves much wider use in California. Speakers noted that although trading has helped some here, California’s water market still lacks transparency—with only limited information available about trading rules, volumes, and prices.
Australians also benefited from a strong water policy foundation going into their mega-drought, including a national water initiative. This national agreement (which state and territorial governments agreed to abide by) focused on ensuring reliable water use information that is publicly shared, and also mandated the separation of land ownership and water access. These two factors have helped facilitate water management, sharing, and marketing. While separating land and water ownership may not be in the cards for California, there are other ways to improve water marketing here by strengthening water-use information. As elaborated in a 2015 PPIC report on managing our drought, several other policy priorities that were at play in Australia are also within our reach: setting clearer priorities for public health and the environment, managing demand and supply more stringently, and implementing progressive environmental drought management practices.
Australians were able to create a more resilient water system, but some researchers at the conference noted that their drought management was not without fault. One cautionary tale was that much of the costly new infrastructure put into place in response to the drought—mainly desalination and inter-basin pipelines—brought increased water supply benefits only after the drought ended, due to the time it took to plan and build desalination plants, in particular. While desalination is currently providing drinking water in Western Australia, where dry conditions have continued, plants built to serve communities in other regions have not been used because cheaper alternatives are once again available.
A key recommendation made by a number of panelists was to ensure that all other options are exhausted before moving forward with costly infrastructure projects like desalination. In addition, it’s important to take other steps to develop sound policy in areas like water information before the next drought. Because droughts are unpredictable but cyclical, long-term vision and preparedness are critical.
The takeaway from the meeting was that while the challenges and debates in California are similar to those during Australia’s Millennium Drought, the comparison is not perfect. As we continue to adapt and develop our own drought policies, it will be important to take lessons from both the successes and ongoing challenges experienced during Australia’s “big dry.”
Adam Soliman is a graduate student in agricultural, food, and resource economics at Michigan State University. He served as an intern at the PPIC Water Policy Center this summer.

Water Management’s High-Tech Future

California’s water management systems face a list of daunting challenges, from the current drought to water pollutants to aging infrastructure. Newsha Ajami is at the cutting edge of encouraging high-tech advances to improve how cities manage water, both in her role as director of urban water policy at Stanford Woods Institute for the Environment and as a member of a new project called ReNUWIt. We asked her about some of the advances she’s seeing around the state, and what a “next-gen water system” might look like.

PPIC: How is technology changing how we manage water?

Newsha Ajami: Technological advances are playing a significant role in many aspects of water management—from how individuals use water (for example, water-efficient appliances), to how we collect data and measure our water supply (such as smart meters). Some of these technological advancements have been directly impacting customer behavior. For example, software like WaterSmart allows customers to better understand their water use habits and potentially revise them. In the past 30 years, water use per capita has been dropping steadily, in part due to tech advances like more efficient toilets, washing machines, dishwashers, shower heads, and the like.

Also, various water purification technologies have enhanced our local and regional water supplies through treatment and reuse of wastewater for different purposes. For example, the West Basin Water District has been purifying some of the wastewater from the Los Angeles area and supplying it to various industrial and commercial customers.

In the near future, technologies that allow us to capture and reuse stormwater, rainwater, and graywater could play a significant role in enhancing regional water supplies and enhance our water supply portfolio.

PPIC: What are some of the more interesting projects that ReNUWit is focusing on to improve urban water management?

NA: There are so many interesting engineering and management projects within the ReNUWIt program. ReNUWIt researchers have developed an innovative wastewater treatment technology that allows us to treat wastewater and generate energy from captured methane, simultaneously. The energy is used to power the water reclamation process, making it a net zero-energy wastewater treatment system.

We’re also working on a smart water-trading platform, which is a tool to enable virtual trading in regions with shared water. The way it would work is that when users can make do with less of the high-quality water in their shared system—perhaps by building a water recycling plant for use by the industrial sector—their saved water is made available for other users in the system. It’s sort of an Airbnb for water. The system can provide a platform for water suppliers to share in a more flexible and transparent way.

Also, in partnership with the Oro Loma Sanitary District and various industries and NGOs, ReNUWit is designing a “constructed wetlands” at the Oro Loma wastewater treatment plant on San Francisco Bay. This is a multipurpose project to remove nitrogen, provide habitat, and buffer the treatment plant from the effect of sea level rise. We are also testing to see if such wetlands could potentially remove contaminants such as pharmaceuticals, fire retardants, pesticides, and chemicals from home cleaning products. This approach offers a creative way to meet environmental concerns related to wastewater treatment without the need to replace the entire treatment plant.

PPIC: You’re also on the Bay Area Regional Water Quality board. What kinds of improvements are you seeing in this area?

NA: The San Francisco Bay Regional Water Quality Control Board has been undertaking multiple initiatives to further protect our water bodies from pollution. For example, in our efforts to better manage and clean up various pollutants that show up in urban runoff, the updated Municipal Regional Stormwater Permits would require municipalities to develop a plan to implement green infrastructure throughout their jurisdictions. We are also actively working with our permittees on reducing trash, which often finds its way into our waterways. And we are streamlining permitting of recycled water projects, especially those that aim to provide recycled water for residential landscape irrigation use.

PPIC: What good things are coming out of the drought?

NA: California has taken many steps to address water reliability in the past few years, partly due to the severe drought we have been facing—from big-ticket items like our new groundwater law and the $7.5 billion water bond, to smaller fixes like streamlining permitting of recycled water projects. The drought has also raised public awareness regarding water scarcity, which plays a vital role in changing consumer behavior in both the short and long term. It’s led to renewed statewide discussion on how we value our water resources, and how we allocate it among competing demands. I really hope some of these discussions turn into action and change the way we manage and govern this precious resource.

Video: Meeting Water Challenges on the Central Coast

The Central Coast has long been self-sufficient in water supply, but the drought has tested the region’s independent streak and helped foster growing cooperation among water agencies and interest groups.

“I would hope that we really start thinking regionally,” said US Rep. Sam Farr, who’s represented the Central Coast for more than 20 years. That was the biggest takeaway message from a wide-ranging panel discussion in Monterey this month, co-hosted by the PPIC Water Policy Center and water supplier California American Water.

The event brought together local experts to discuss the challenges of creating a more diverse water supply, resolving water problems, and protecting the environment.

Groundwater concerns have grown as four years of drought have increased the need for pumping, and saltwater intrusion is a persistent problem.

“In the Central Coast hydrologic region 85 percent of freshwater demand is met by groundwater—and that’s the largest fraction in the state,” said panelist Andrew Fisher, a hydrogeologist with the University of California, Santa Cruz. He noted that climate change will bring fewer but more intense storms, which will mean more runoff and less groundwater recharge. He said that we must put greater effort into recharging groundwater and understanding how much we’re using.

Panelist Norm Groot, executive director of the Monterey County Farm Bureau, discussed a local project to “push the saltwater back to sea” in the Salinas Valley aquifer. He noted that local farmers have been working hard to reduce water use and manage local aquifers more sustainably. Drip irrigation is now used on 60 percent of fields in the Salinas Valley, and another 12,000 acres are using recycled water and have been taken off groundwater pumping, he noted.

Moderator Paul Rogers, environment writer with the San Jose Mercury News and managing editor of the KQED Science Unit, noted that local residents already have some of the lowest water use rates in the state—about 70 gallons per person per day, compared to a statewide average of 97—yet still managed to conserve 29 percent after the mandate was put in place by the governor in April.

Monica Hunter, a board member of the Planning and Conservation League Foundation, noted that despite the area’s efforts to conserve, wells are going dry and small rural communities in the region are facing big water challenges. She noted the need for more data: “We really do not know the magnitude of these problems.”

The region is also rightly proud of its efforts to restore the Carmel River by removing the San Clemente Dam. “People from—I would say not just around California but around the nation—are looking to this region as a test case for removing a dam,” said Ellen Hanak, director of the PPIC Water Policy Center.

Carmel mayor Jason Burnett closed the evening with observations about climate change, conservation, and creative solutions. Sometimes we need to rethink what we used to see as a liability, he said. “Something we discarded is now something we can turn into an asset. You heard talk about stormwater, you heard talk of wastewater and turning those into assets that we can use and use time and time again. We’re already doing that here on the Central Coast.”

Video: What If California’s Drought Continues?

Four years into a historic drought, the environment and some rural communities are most at risk if hot, dry conditions persist. At an event in Sacramento last week, Ellen Hanak, director of the PPIC Water Policy Center, gave an overview of findings from the new report What If California’s Drought Continues, touching on the higher risk of large wildfires, increasing land subsidence from groundwater pumping, and the growing crisis affecting freshwater ecosystems and species. A panel of experts then dove deep into the drought’s perils—and success stories—before a capacity crowd.

Jeffrey Mount, senior fellow at PPIC and a co-author of the report, moderated the panel, which included Wade Crowfoot, deputy cabinet secretary and senior advisor to Governor Brown; Laurel Firestone, cofounder and co-executive director of the Community Water Center; and Kevin Hunting, chief deputy director of the California Department of Fish and Wildlife.

Asked to describe the successes and “pleasant surprises” in the state’s efforts to manage the drought, Hunting said his department has had to redefine success. “In the past success for us would be stable populations, recovering populations of endangered species,” he said. “Unfortunately, we’re in a situation now where success means avoiding extinctions … and really, plugging the gaps in the biggest risk areas.”

He said the agency has also brought creative approaches to managing fisheries and wildlife with a dwindling amount of water, including partnering with private water users to deliver water at critical times to support fish and waterbirds.

Firestone said major strides have been made in state-run efforts to get emergency water supply to rural communities facing water shortages. Beyond the state’s programs, she cited the efforts of volunteer and local agencies in these communities—”local people just trying to help their neighbors.”

Crowfoot gave his short list of drought successes, topped by water conservation across the state. “The real heroes of the California drought are actually everyday Californians,” he said, noting the latest water conservation statistics showing a statewide reduction in water use by over a quarter. He also cited the work of local water agencies, legislation—such as groundwater management reform—that crossed political boundaries, and unprecedented cooperation by state and federal agencies.

The panelists noted that much more needs to be done to both build on these successes—and strengthen efforts to address the challenges of continued drought.

The Carmel River Gets a Boost

The Carmel River is a shadow of its former self these days, due to overuse of its waters, drought, and dams. But an ambitious project to remove one of its two large dams will bring some life back to the overtaxed river.

The removal of the 106-foot-high San Clemente Dam, now filled with sediment, will be the largest in the state. It will open miles of spawning and rearing habitat for threatened steelhead trout and restore some of the river’s natural flow of sediments. The restoration of sediment flows will support the riparian ecosystem downstream, create gravel beds used by spawning fish, and help replenish sands at Carmel Beach.

The 1920s design of the dam does not meet modern safety standards. Removal of the dam involves many complex challenges, but the biggest by far is managing the 2.5 million cubic yards of sand, silt, gravel, and cobble behind the dam that have displaced all of its water storage capacity. The dam’s remote site precludes removing these sediments mechanically; instead, the project will create a permanent sediment storage area by rerouting the river for half a mile.

Removing San Clemente Dam will help improve habitat, but it isn’t a panacea for all of the river’s problems. Upstream of San Clemente Dam, Los Padres Dam blocks the best spawning and rearing habitat, which is in the Ventana Wilderness Area. Questions still remain about the fate of this dam and fish passage around it. However, removal of San Clemente Dam sets the stage for addressing other aging dams that are ripe for removal around the state.

California has more than 120 reservoirs—most of them small—that have lost at least 75% of their storage capacity to sedimentation. At least three dams in the Coast Ranges are prime candidates for removal: Matilija Dam on the Ventura River, Searsville Dam on San Francisquito Creek on Stanford University property, and Rindge Dam on Malibu Creek. While removing these dams would open up habitat for migratory fish, a key issue hindering their removal is what to do with the decades of sediment accumulated behind them.

Dams are often the principal factor causing degradation of the river ecology. Removing them can often be the single action with the greatest restoration benefits. But other factors affect river health, too, from land use to water abstractions. The Carmel River is not just constrained by dams, it also has been subject to excessive diversions of its waters. Starting in 2017, the river will get increased flows in response to an order by the State Water Resources Control Board to significantly reduce water diversions. Thanks to these efforts, the Carmel River is looking to be a rare success story for the state’s troubled rivers and native fish—and one that is even more important given the huge setbacks the environment has suffered during the drought.

Watch the removal of the dam via webcam.

Learn more about reducing the negative impacts of dams in chapter 5 of Managing California’s Water: From Conflict to Resolution (pp. 228-238).

Central Coast a Microcosm of State Water Challenges

Water challenges around the state are in many ways unique to a particular place, but there are also many similarities and lessons to be learned from place to place. We talked to Richard Frank, a member of PPIC Water Policy Center’s research network, about water management on the Central Coast, where he lives when he isn’t teaching environmental law at UC Davis and directing the school’s California Environmental Law and Policy Center.

PPIC: How are Central Coast water challenges a harbinger for California’s water future?

Richard Frank: First off, even before the current drought, the Central Coast experienced chronic water shortages; we came to a crisis point earlier than the rest of the state. Water shortages are a constant problem here, especially for the Monterey Peninsula—in part because the region isn’t connected to any of the large state or federal water projects. As the Central Coast grapples with trying to achieve water supply self-sufficiency, it’s helping to forge a path for other regions—especially in the southern part of state, which has become far more aggressive at developing regional supplies and reducing reliance on centralized state systems.

Monterey County also reflects an interesting statewide phenomenon. We have a growing divide between a relatively prosperous urbanized coastal zone competing for water with a rural inland area—the Salinas Valley—that is one of most vibrant agricultural areas in the state, and even the nation. We’ve been slowly increasing urban demands for water at the same time that agriculture’s large, steady demands are ever more challenging to meet. I’ve been struck by how this one county illustrates a broader California dynamic—a tale of two states. The classic conflict between Northern and Southern California has become one of urban-coastal vs. inland-agricultural.

Our region is also ahead of the game in the debate about desalination. Monterey and Santa Cruz Counties had been considering a joint project, but in recent months, the alliance has fractured. Monterey is still cautiously proceeding with plans for a desalination plant. Though it is not without concerns, I think it’s the least bad alternative we have. I don’t think we can conserve our way out of major droughts in this region, especially since we’re likely facing a “new normal” of hotter weather and more persistent droughts. We also can’t increase our groundwater pumping indefinitely. We have a big groundwater problem on the Central Coast—over-pumping has caused saltwater intrusion, which is contaminating our groundwater supply. Connecting to state and federal water projects is not a solution. They aren’t able to meet existing demand and can’t expand deliveries, given concerns about water needs for endangered species.

PPIC: What could the rest of the state learn from how the Central Coast has managed its biggest water challenges?

RF: We have a small market-based system for water transfers in urban areas in Monterey. Each property is assigned water credits, which can be traded; we’ve developed something of a robust market in water credits. It’s based on historic use. Each residence gets separate credits for each indoor use of water, and you can’t expand them (for example, add a new bathroom) without additional water credits. It’s a working example of water marketing on a micro-scale. Our market is not as transparent as it should be, though. For example, you can’t go online to see who has credits for sale.

PPIC: What permanent changes do you hope to see come out of this drought?

RF: Some in the Central Coast have adopted a head-in-the-sand attitude about our endemic shortages, and this is something I think the drought is helping to change. For example, we’ve had chronic excess diversion of the Carmel River, to the point that the State Water Board ordered a stop to it. After some resistance, the local water utility was forced to take action and tackle the impending cutbacks on supplies. The desalination project is part of the solution to having cutbacks on this water source. Another positive development is the removal of the outdated San Clemente Dam on the Carmel River; this river restoration is very much a positive development, and a harbinger of a more sustainable future. 

Another positive change is the easing of the disconnect between prosperous coastal communities and inland agricultural areas. I think there is hope for a better relationship between these groups, because the drought is getting people talking more about how to solve our water problems. I am also hoping for a better functioning and more transparent water market. Finally, while we already use some recycled wastewater—for instance, on some golf courses—there’s still a lot of potential for harnessing this resource, including recharging our groundwater basins and helping get them into balance.

Read Richard Frank’s blogs on Legal Planet.

Register for the PPIC Water Policy Center event in Monterey on August 18: Meeting Water Challenges on the Central Coast.

California’s Renters in the Dark on Drought Targets

Californians have been asked to cut back their water use since last year, but June marked the first month under the mandatory conservation mandate. Now the numbers are in, and the news was good: statewide we exceeded our goal.

While meeting the mandate is likely on the top of the minds for water managers, most Californians don’t know the details of what is being required of them. It’s not a straightforward cut: each urban water agency has a different conservation target, ranging from 4-36%, depending on a number of factors. While most agencies successfully met their June targets, many will need to conserve more.

The July PPIC Statewide survey found that only 30% of adults know the amount they are being asked to conserve. And it turns out whether you are a homeowner or a renter plays a significant role in your awareness. Notably, homeowners (44%) are more than twice as likely as renters (18%) to report knowing the amount of conservation required. On the other hand, of those who are aware of their conservation target, about half of homeowners and renters (53% each) say it is the right amount. We also find that while solid majorities across both groups say their local water supply is a big problem, homeowners (77%) are much more likely than renters (60%) to hold this view.

In general, renters are less connected to their water use. They often do not pay the water bill, so they may not know how much water they use, and they lack financial incentives to conserve. In addition, renters use less water. Renters are often not responsible for outdoor watering, which accounts for more than half of water use in cities and suburbs. During this drought, state and local agencies have focused more of their effort on reducing outdoor watering, but renters’ water conservation must come mainly from indoor behavior. Since renters make up about 45% of California’s households, this is not a group of water users to ignore as the drought continues.

The more people know about how much water they use, the more likely they are to conserve. Renters often live in multi-unit buildings with one main meter to record the entire building’s use, making it very difficult to parse out how much water is used by individual units. Requiring sub-metering on new multi-unit buildings may help reduce future water use, but it is an expensive investment that won’t result in significant reductions in the short-term.

Infiltrating renters’ awareness and reducing their water use will require different incentives and education efforts—especially since renters are much less likely to follow news about the drought. For example, water agencies should expand public outreach campaigns focused on indoor use and feature them in urban areas with high renter populations. Renters should be encouraged to check for leaks in their toilets and request that their landlords perform leak-checks on the rest of the property. Landlords should also be encouraged to take advantage of available rebates to upgrade to efficient appliances, toilets, and shower heads. There may be more that most homeowners can do to reduce water use, but as a large portion of the population, renters can also play a role in getting us closer to our goals. The drought provides an opportunity to change perceptions of this scarce resource by all Californians.

The Challenges of Getting More Crop per Drop

The continuing drought is having a big ripple effect in California agriculture. We talked to David Zoldoske, the director of Fresno State’s Center for Irrigation Technology (CIT) and a member of the Water Policy Center’s research network, about trends in farm water management.

PPIC: How well is California agriculture doing in terms of water efficiency in recent years?

David Zoldoske: The big change is that the state’s growers are investing heavily in drip and micro-irrigation systems, and very soon there will be more acreage using these efficient systems than flood or furrow irrigation. Part of the increase comes from growers converting annual crops to trees and vines, and installing micro irrigation systems. So while we’ve gotten more efficient in irrigating these acres, we’ve also hardened demand for water—and in some cases increased overall water demand—because these perennial crops can’t be fallowed in times of drought. But there’s no doubt that this is a paradigm change, and it’s making California agriculture more efficient in its overall on-farm water use.

PPIC: What successful water-management technologies are California farmers already using that deserve wider adoption?

DZ: Tools such as water meters for measuring flow rates from pumps and soil moisture sensors are both important to improve water management. Scheduling for efficiency means knowing how much water you’re applying (the meters), and how deep it’s going (the sensors). Flow meters also help growers see real-time changes in how much water they’re using—if flow rates decrease, it could indicate a drop in groundwater levels, a worn pump, or perhaps a clogged filter. Without metering, it’s like driving a car without a speedometer or odometer. We’ve estimated that only about a third of groundwater pumps have flow meters installed, so there’s lots of room for wider adoption of this important technology. Water meters can provide important information both on-farm (how efficiently is the irrigation system performing and how much water was applied), as well as a measuring groundwater basin withdrawals.

PPIC: What’s the potential for high tech improvements to take farm-water efficiency to the next level?

DZ: Managing water on a large irrigated farm is both an art and a science, with multiple data points to consider. Many growers are operating with too little information, while others may be experiencing data overload from all the technology inputs. New cloud-based technologies can help farmers get more data, in real time, and allow them to better manage their crop water needs. But it’s important to remember that even with improved technologies on the farm, you can’t efficiently manage a poorly operating system. Often it’s the low tech approaches that provide the most benefits—like getting your pump tested, having your irrigation system audited for uniformity, and improving scheduling. Farmers need to get better at these basic technologies before the high tech improvements can really work. There is a tremendous opportunity for the state to help incentivize the adoption of key technologies like water meters to improve water efficiency across a broad spectrum of irrigated land. California should be strategic when it provides financial assistance for adopting new water technologies.

PPIC: Are there “unintended consequences” to agriculture becoming more efficient?

DZ: As we convert more acres from flood or surface irrigation to higher efficiency drip systems, we need to be aware that we may be losing potential recharge for our groundwater basins. Excess water applied to a field is an important source—and in some places the primary source—of recharge. Improving water efficiency on any one farm can directly affect the groundwater supply of a nearby farm or municipality. California must aggressively address the need for more groundwater recharge as an offset for more efficient farm water use.

PPIC: What long-term improvements to agricultural water management do you think will come out of this drought?

DZ: The biggest change will be the understanding that we need to manage groundwater basins for sustainability. It will likely cause some financial pain and suffering, but it will also help us avoid a “tragedy of the commons” situation, where everyone loses as groundwater basins are exhausted. Right now, we have too many big straws in the aquifer, and we have to start managing for the long view. I also believe we’ll be making more use of non-traditional sources of water, such as the large amounts of saline groundwater found in parts of the Central Valley. We are also evaluating the potential of diverting excess floodwaters to cropland with high infiltration rates, to help recharge groundwater basins during wet years. And most likely in future, we’ll be farming less ground in California, but getting “more crop per drop” by using water more efficiently.

Read more: Water for Farms from our California’s Water briefing kit

Photo: David Zoldoske in the field.

The “Inexact Science” of Water Pricing

How can the price of water help us manage the drought? Like everything to do with water management in California, there is no easy answer. The State Water Resources Control Board recently held a workshop to examine the current pricing climate and explore the state’s role in helping urban water utilities adopt conservation-oriented water rates.

Currently, more than half of the state’s urban water utilities use some form of tiered water rates, which increase the per-gallon charge for higher levels of water use. While tiered pricing can encourage conservation, utilities also must meet other competing objectives, particularly covering the cost of providing services. When water sales fall, balancing the books can be a challenge, because fixed costs make up as much as 70 to 80 percent of total utility costs.

Ellen Hanak, director of PPIC’s Water Policy Center, presented findings from recent PPIC research on water system finance at the workshop. She noted that “urban water agencies have been successful so far at using revenue from water rates to remain fiscally stable.” But while utilities have generally been investing at a healthy pace, they are likely to be drawing down their financial reserves as water sales have fallen during this drought. Hanak also said that while pricing “is not an exact science,” water agencies could improve communication with customers about the major costs that must be covered even if water use declines.

One complicating factor lies with Proposition 218, a 1996 initiative that sought to ensure that the charges for many local services, including water, are closely linked to the costs of service to individual properties. Hanak and other panelists expressed concern that courts are interpreting the proposition’s cost-proportionality requirement too rigidly to allow tiered pricing to work effectively. For instance, a recent ruling in a case against San Juan Capistrano’s tiered pricing states that while this type of pricing is legal, the tiers must correspond to the actual cost of providing service at each level of usage – something easier said than done.

Ken Baerenklau, an associate professor at UC Riverside and a member of the Water Policy Center’s research network, studied a Southern California water district’s use of a specific type of tiered pricing, and found that household water demand was reduced by approximately 15% without significantly increasing the average price of water service. Baerenklau emphasized the need for better data collection on water rates and consumption in order to examine the effectiveness of various pricing mechanisms. He also noted that “there is a difference between the price and value of water,” and that we are currently not paying the true cost, especially with respect to the environment.

Lester Snow, executive director of the California Water Foundation and member of the PPIC Water Policy Center’s Advisory Council, recommended renewed investment in water infrastructure and management to adapt to our changing climate. Snow said that fundamental water policy changes should be made now while attention on water issues is high. He also advocated for reform of Proposition 218, saying that we are pushing people to conserve, but have systematically withheld some of the tools water agencies need.

Water Board members expressed interest in creating a clearinghouse of rate-setting tools for water agencies and case studies of agencies with successful conservation pricing. This will help agencies better understand what has worked and how to minimize the risk of adopting new pricing structures. Another important step mentioned by a number of panelists was the need for a statewide fee that could fund “fiscal orphans”—areas that are difficult to fund locally—such as lifeline rates for disadvantaged communities, stormwater capture, and investments to improve drought management.