COMMENTARY: Implementing New Strategies to Withstand Drought

Editor?s Note: For this month?s commentary, we reached out to the Water Research Foundation (WRF) for some perspective on drought conditions across the United States. The WRF offered some of the findings from recent reports on drought management from a webcast series it hosted in July. Topics included drought management practices, turf replacement programs, financial resiliency and customer communications. All four webcasts are available On Demand on the WRF website and are free and open to the public.
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Using Cost-Benefit Analyses to Compare Drought Management Practices

This webcast summarized WRF report #4546, Drought Management in a Changing Climate: Using Cost-Benefit Analyses to Assist Drinking Water Utilities. When performed correctly, cost-benefit analysis can help utilities choose between various drought management practices. Cost-benefit analysis is a simple idea, but it has challenging details. The basic steps of a cost-benefit analysis are as follows:
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1) Identify and measure program costs
2) Identify and measure program benefits
3) Discount future costs and benefits
4) Calculate the net triple bottom line impact of the program
5) Analyze the sensitivity of the results to assumptions

The key take-away for utilities considering a cost-benefit analysis is that the cost and benefit assumptions made at the outset about each drought management program will drastically affect the net present value estimate at the end of the analysis. Utilities interested in using cost-benefit analysis must invest significant time and resources to end up with accurate estimates of costs and benefits, and therefore accurate net present values, in order to make a smart decision about drought management practices.
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Turf Replacement Programs

In many areas of California, outdoor water use represents more than 50 percent of residential water use. Some utilities have found that turf replacement programs with rebates are the best incentive for customers to reduce outdoor water use. This webcast highlighted turf replacement programs at three utilities: Metropolitan Water District of Southern California (MWD), San Diego County Water Authority and Southern Nevada Water Authority. These utilities offered rebates from $1 to $2 per sq-ft of turf removed, and required participants to replace the turf with drought-resistant plants.

Even though immature drought-resistant plants require high water use until established, these drought-tolerant plants will use less water in the long term. For example, Southern Nevada Water Authority (SNWA) found that lawns in the area required 73 gallons per square foot annually, but SNWA?s Water Smart Landscape only used 17.2 gallons per sq-ft annually. SNWA has invested more than $200 million in its water smart landscape rebate program, which has converted 174 million sq-ft of turf to water efficient landscaping, and saved more than 9.7 billion gallons of water annually (over 88 billion gallons since the program?s inception).

Financial Resiliency During Droughts?

Droughts force utilities to reduce the amount of water they sell, which results in reduced revenue. This webcast highlighted rate strategies, policies and procedures that can ensure financial resiliency before, during, and after a drought. Utilities that have seen a decrease in water sales may decide to recapture revenue by adjusting rates and pricing policies. When evaluating policy and pricing changes in response to or in preparation for a drought, utilities should consider the following questions:
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1) How should water be allocated?
2) How much will this drought cost us?
3) How will we recover from this?
4) How will this affect my customers?

This webcast included a case study from Alameda County Water District (ACWD). ACWD was impacted by the current drought in early 2014, and immediately implemented a water demand reduction strategy to reduce overall water consumption by 20 percent. Such drastic reductions in water use and revenue forced ACWD to think creatively about how to recapture lost revenue. To maintain financial resiliency, ACWD undertook the following steps:

1) Leveraged reserves
2) Reduced expenses
3) Deferred capital projects
4) Issued revenue bonds
5) Implemented drought surcharges and increased service (non-commodity) charges.

Communications During Drought

Utilities must communicate to the public regarding responsible water use and the importance of conservation during droughts. Identifying concise and meaningful messages that resonate with the public is critical. A great example showcased in this webcast was Denver Water?s ?Use Only What You Need? and ?Use Even Less? campaigns (see below).
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In addition to meaningful messages that resonate, the placement of messaging is also important. For a conservation campaign to be successful, customers should see conservation messaging throughout the community, such as at sporting events, on public transit, at schools and churches, etc. Consistent community engagement via outreach, rebate programs, and a modified rate structure can successfully reduce water consumption, as shown by Denver Water?s residential use over the past 14 years.

Going forward, utilities will need even more strategies to save additional water when the next (inevitable) drought arrives. Utilities are encouraged to take advantage of new Advanced Metering Infrastructure (AMI) technologies and to provide water budgets that touch on both indoor and outdoor use goals for individual households.

John Albert is subscriber services manager, subscriber and research services, for the Water Research Foundation. Albert joined the Foundation in January 2005. Prior to that, he worked as a research associate focusing on on-site wastewater systems and bacterial source tracking. He holds an MPA with a concentration in Non-Profit Management from the University of Colorado?Denver, as well as an M.S. degree from the Colorado School of Mines and a B.A. in biology from Saint Anselm College, Manchester, New Hampshire.

Maureen Hodgins is a research manager, subscriber and research services, for the Water Research Foundation. Hodgins joined the Foundation in July 2005. Prior to that, she worked for the Marine Department of the U.S. Antarctic Program as science cruise coordinator. She also worked at the University of California as a staff research associate studying trace organics in environmental samples. Maureen holds a bachelor?s degree from Oberlin College, where she majored in Biology.

Megan Karklins is an editorial assistant in communications and marketing for the Water Research Foundation. Karklins joined the Foundation in July 2014. Prior to that, she worked for a real estate corporation and was a Fulbright Fellow in Germany.? She holds a master?s degree in International Affairs from the University of Denver and a bachelor?s degree in German Literature and Religious Studies from Kenyon College, Gambier, Ohio.

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