When sources have been tapped out, and demand keeps rising, one of the oldest tricks in the water conveyance professional’s handbook is matching price to usage. This can work in one of two ways—through incentives or penalization.
Most rate structures are designed to penalize big water users (and wasters). Your bill goes up—sometimes hitting designated pricing tiers—as your consumption increases. It’s a familiar tug-of-war and can be an effective deterrent to rampant water waste. Of course, there will always be those users with pockets big enough to absorb even the heftiest price tag, but for the typical consumer—including the large scale commercial or industrial complex—pricing is enough to influence behavior.
China is certainly banking on the efficacy of pricing controls with its new progressive billing system. As reported by China Water Risk and China Daily Europe, China plans to introduce its progressive pricing scheme gradually over the next three years. The government’s latest water conservancy plan includes a progressive pricing scheme similar to a progressive tax, with rates rising exponentially as consumption increases. And while rural residents—in particular, farmers who depend on water for their livelihood—will receive price discounts as long as their usage falls within set quotas, water-intensive industries will be subject to the higher rates. The rate scheme, developed by the National Development and Reform Commission, is one part of a master plan the country is adopting in hopes of maintaining its water use within 635 billion cubic meters by 2015, while simultaneously reducing water consumption per unit of industrial output by 30% from 2010 to 2015.
China hopes the new rates will spur interest in alternative water resource management, including a wider incorporation of water reuse. In a similar vein, Australia announced last month that the nation’s Water Efficiency Labeling and Standards (WELS) scheme secured parliamentary approval via the passage of the Water Efficiency Labelling and Standards Amendment (Scheme Enhancements) Bill 2012. Known as the WELS scheme, the water efficiency labeling program awards a rating of zero to six stars on a variety of consumer products—including washing machines, dishwashers, and toilets—in order to influence customer purchases. Similar to EPA’s Energy Star program, the WELS scheme also sets minimum water efficiency standards for toilets and washing machines.
Meanwhile back in the US, a new bill introduced in the Senate aims to incentivize water efficiency. Last week, the US Senate Energy and Natural Resources Committee Chairman Jeff Bingaman (D-NM), introduced a bipartisan bill aimed at creating incentives for the nation’s industrial sector to encourage end-use energy efficiency and water efficiency. The Bill—S. 3352, the Expanding Industrial Energy and Water Efficiency Incentives Act—awards incentives to industrial and manufacturing facilities who employ the following methods and equipment: water reuse, thermal biomass, combined heat and power systems, and advanced motors with adjustable speed drives (for easy connection to the Smart Grid). The hope is that the bill will exponentially improve industrial energy efficiency while also saving billions of dollars annually.
“A major study on energy efficiency found that the industrial sector represents the largest potential for increasing energy efficiency in the country,” Senator Bingaman said in a statement. “Such improvements could save $47 billion annually.”
So what do you think? Is progressive pricing the way to go when it comes to legislating water efficiency? Or do incentives have a better chance of succeeding? And do either of these practices do enough to encourage smart water resource management?