The Economics of Water Conservation

Aug 14, 2012

The land of enchantment is rich in many natural resources. Water, however, isn't one of them. And while higher prices have a way of persuading people to consume less, would raising water rates cause New Mexicans to turn off their spigots? 

At 6am the sprinkler system at my friend Scott Roberts house emerges from the ground, delivering some much needed water to his thirsty lawn.

Scott’s from Minneapolis, where water is decidedly more plentiful, and green grass is a luxury that he doesn’t take for granted here in New Mexico. But Scott says it’s only because the cost of water in Albuquerque is so cheap.

"I was expecting to not be able to grow grass in my yard, but I water it as much as I want because there's no financial restriction to not do it."

Well, you can’t water your grass as much as you want, Albuquerque does have some restrictions. According to the water authority, watering hours for residents are limited to 3 days a week and only in the mornings and evenings.

But Albuquerque has traditionally enjoyed lower water rates than other...wetter...U.S. cities. And with lingering drought and population growth straining the water supply here, water experts say, something has got to be done to encourage more conservation.

UNM Economics professor, Dr. Janie Chermak, says one way to do that is by raising rates. Because what we’re paying for water right now does not reflect its true value.

Albuquerque residents are currently paying about $1.50 for around 750 gallons, or one unit of water.

"Let's say they use 5 units of water, you're looking at around $10-$12 a month for your per unit usage. That's like 4 medium Starbucks coffees. It's just not a big portion of people's incomes"

And she says cheap water is a big reason why it’s tough to encourage people to conserve here.

While higher prices aren’t the only way to increase conservation, Chermak says they are pretty effective. Take Santa Fe for example, where they pay about 4 times more than Albuquerque residents for their water. Over the last 10 years, Santa Fe has cut average daily water use by more than 60 gallons per person, reducing their total usage to about 105 gallons per person per day.

The Duke City can’t boast those numbers, but Katherine Yuhas, the conservation officer at the Albuquerque Bernalillo County Water Utility Authority says don’t count Albuquerque out.

In the last decade Albuquerque has reduced its average per capita water use by about 35%. And last year, the city met Bernalillo county’s goal of 150 gallons per person per day 13 years early. Yuhas credits much of the conservation success to the various rebate programs the city offers for doing things like xeriscaping, or installing water-wise appliances like low flow toilets, and automatic rain sensors for your sprinklers.

And she argues our water rates here do reflect the scarcity of water in New Mexico, because the rate structure is set up to encourage customers to use less water outdoors.

Albuquerque uses a graduated block rate system, so if you’re watering your lawn, you’re paying much more than others who let theirs get crispy. Which Yuhas says is very important, because around 45% of the water in our service area is lost to outdoor use, like landscaping. Household water, on the other hand, can be recycled, treated, and reused later.

According to Yuhas, our water rates are based on the cost of delivering water to residents, meaning our water bills reflect the utility's cost to treat the water, maintain the treatment plant and the pipes, and deliver the water to your faucet. The water itself though, isn’t part of the cost.

Higher prices are on the way for Albuquerque, but not to encourage conservation. They’ll cover some much needed upgrades over the next several years.

And while the higher rates are good news to Michael Jenson, the communications director at Amigos Bravos, he believes it’s more important to amend our rate structure to lessen the cost burden on low income users.

He says the most effective models provide a lifeline amount of water to everybody for free, but include steep price increases for people who go beyond that.

But there are a couple of other…more old school ways of saving water that Jensen also recommends to sustain New Mexico’s vanishing water supply like "not flushing the toilet...you know if it's yellow, let's be mellow sort of thing"

And Jensen says, showering with your sweetie isn’t a bad idea either.