January-February 2007

Kings of Conservation: How the Most Successful Incentive Programs Work

The 1990s brought a revolution in water conservation incentive programs throughout the US and Canada.

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By Ed Ritchie

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Major cities such as New York and major water districts such as California’s Metropolitan Water District implemented a wide variety of incentive programs to curtail runaway water usage in the 1990s. Some worked; some failed. Here’s the best from successful programs.

New York City’s infrastructure of 6,100 miles of water pipes and more than 6,400 miles of wastewater lines was severely stressed in the mid-1970s. A growing demand pushed water-supply facilities above safe levels, and by 1990, three of New York’s wastewater treatment plants were exceeding permitted flows.

“We were faced with increased use in the 1980s and going into drought emergencies every other year,” recalls Warren Liebold, director of conservation with the New York City Department of Environmental Protection. “Three of our wastewater treatment plants were flowing above their Clean Water Act requirements. So we faced a choice of expanding both water-supply and wastewater treatment capacity or reducing consumption.” A study showed that conservation was an order of magnitude less expensive than expanding capacity. Conservation was the obvious choice, but New York City’s rate structure had to change before residents could be sold on changing their water usage habits.

In the past, residential properties with one to four families didn’t have individual water meters because they were on a flat rate system typically paid by the bank holding their mortgage. A water meter installation program for these residences began in 1991, and rates increased significantly. “If we hadn’t installed meters and raised rates, the incentives would never have been effective,” says Liebold.

The incentive program included a door-to-door water efficiency survey with homeowners, plus educational information, free showerheads and aerators, and a free leak inspection. A high-efficiency toilet (1.6 gallons per flush) program targeted the replacement of more than 1 million toilets over a three-year period (1994 to 1997). Homeowners, apartment-building owners, and commercial-property owners received rebates of $150 or $240 per toilet.

When the city analyzed the cost of the toilet rebate program and compared it to deferring the construction of additional facilities and expansions for 10 years, the savings equaled a net present value of $250 million. “We wanted to save a lot of water in a short period of time,” Liebold explains. “When these programs go on for long periods of time the larger percentage of people who take the incentive are probably those that were already going to replace their toilets. Over time it’s difficult to differentiate between the folks that are doing it for a preplanned renovation rather than those doing it to save water based on an incentive.”

Another strategy for saving more in less time was to target apartment buildings with the highest population density. “That’s where we have the largest number of people using the fixtures,” says Liebold, “but we also wanted to make it affordable for the buildings that didn’t have a lot of money to spend. We wanted to reduce water consumption in buildings that had high density and low income. So we had relatively generous incentives. For the average building it meant that the work got done without any out-of-pocket cost to the owner.”

Keeping track of the money was important. The city used a two-part rebate that paid both the property owner and a plumbing company or supply house or the company’s bank so that the plumbers would be willing to do the work without money upfront. Also, the city outsourced the application processing and back office work. The city’s reputation for red tape didn’t enhance the incentives, and according to Liebold, the outsourcing added credibility to the program, giving owners confidence in a timely delivery of the rebate checks. Upon submission of the rebate application, the city performed an inspection and the rebate check was issued on average within three weeks.

With an aging network of 12,500 miles of water and wastewater pipes, it made sense to develop a computerized sonar leak detection system for water mains, plus an advanced flow-monitoring program to detect leaks in large sewer mains that lead to wastewater treatment plants operating at high capacity.

The leak-detection program saved 30 million to 50 million gallons per day in its early years and continues to help reduce losses. In 1996, leak detection and repair efforts saved approximately 11 million gallons per day. Savings from metering total more than 200 million gallons per day at a cost of $150 million. New York City performed more than 200,000 homeowner inspections, resulting in the elimination of more than 4 million gallons per day in leaks. The replacement of 1.3 million inefficient toilets between March 1994 and April 1997 saved an estimated 70 million to 80 million gallons per day.

Customers saved 20% to 40% in total water and wastewater bills. Overall, New York’s conservation efforts dropped the per-capita water use from 195 gallons per day in 1991 to 167 gallons per day in 1998.

As in the case of New York, the City of Barrie, ON, saw apartment dwellers as the prime source for fast gains in water conservation. Located 80 miles north of Toronto on the shore of Lake Simcoe, the Barrie Public Utilities Commission suffered groundwater limitations thanks to rapid population growth. The arguments for conservation were compelling. If the commission didn’t reduce consumption, it faced spending $27 million (Canadian) for a new surface-water supply. Additionally, there were another $41 million in upgrades to the treatment of wastewater flows that began reaching capacity at the Water Pollution Control Center.

Barrie partnered with the Ontario Clean Water Agency and the Ministry of the Environment on a program replacing inefficient showerheads and toilets and delivering information kits to homeowners and landlords. The city offered homeowners a $145 rebate per toilet and $8 per showerhead. The target was a 50-liter-per-person-per-day (13.2-gallon-per-person-per-day) reduction in water use for 15,000 households.

“The majority of our pickup came from apartments,” says Barry Thompson, program manager at Barrie Water Conservation. “The residential sector included homes, but the economics were so much better for the apartment buildings. Once we got a property manager and he did his whole portfolio we probably enlisted 90% of the apartment buildings. We didn’t get nearly as many single-family residences in terms of percentages.”

Initially, the program provided up to three free toilets per household. But customers had to agree to have an audit of their home to qualify. The city also audited itself, by hiring an outside consulting firm to evaluate the program’s results.

A pre- and post-analysis showed an average savings of 62 liters per person per day (16.4 gallons per person per day), so the program surprised Barrie with results that were 24% higher than the goal of 50 liters per person per day (13.2 gallons per person per day). From 1995 and 1997, 10,500 households received 15,000 high-efficiency toilets (1.6 gallons per flush), representing 60% of the program goal.

The conservation program generated water savings of 1,628 cubic liters per day, and more than 90% of the participants were satisfied with the program and the products installed. Reduced wastewater flows enabled a five-year deferral of the capital expansion project at the Water Pollution Control Center. Water conservation efforts also allowed Barrie to cut the cost of the upgrade to $19.2 million, a net savings of $17.1 million, minus the cost of the conservation program.

Wastewater reductions and upgrades at the facility allowed the city to postpone hydraulic capacity upgrades until 2011. Additionally, construction of a lake-based water filtration plant has been delayed to 2020. The conservation program contributed an additional bonus by creating more jobs than the proposed capital-works program.

The Massachusetts Water Resource Authority (MWRA) didn’t expect any benefits beyond reducing demand when Stephen Estes-Smargiassi launched a conservation program in 1987. The MWRA provides wholesale water for 2.2 million people in 46 cities, towns, and municipal water districts in Massachusetts, and the situation required that Estes-Smargiassi reverse a 19-year trend of withdrawals exceeding the safe yield level of 300 million gallons per day by more than 10% annually.

If conservation couldn’t succeed, the MWRA would have to increase supplies and expenditures. The choices included a plan to divert the Connecticut River, at a cost of $120 million to $240 million (in 1983 dollars), plus an annual operation and maintenance cost of $3 million. Moreover, unchecked growth would force the MWRA to develop a water treatment facility to comply with the Safe Drinking Water Act.

Developing incentives for such a large customer base and so many different municipal water districts created a unique challenge for the MWRA. According to Estes-Smargiassi, the overriding philosophy was accountability. “Our board of directors approached this as if we were building a new resource,” he explains. “Our board of directors approached this as if we were building a new source. If you are going to build a new reservoir for building a tunnel to transfer water from another river it would be a very important project and receive a port of director’s attention. You would make sure that the staff that’s doing it was well managed with an effective leader, that they had milestones and regularly reported back to the board with all general and specific issues. These are the sorts of things you do for a construction project.”

Estes-Smargiassi studied other programs and analyzed models where agencies delivered door hangers or plastic bags with water saving devices. He also studied giveaways at city buildings or shopping malls. “We kept asking about dollars-per-gallon costs and the efficiency,” recalls Estes-Smargiassi. You’d hear reports of 85% installation rates with door hangers. But you laugh, because if you put two $20 bills in a plastic bag people might not open it to find them. Most of those devices ended up in kitchen drawers or trash cans.”

Estes-Smargiassi also found that when free devices were installed the most common were faucet aerators. Showerheads were a distant second, and hardly any of the toilet water displacement devices were installed. Contrary to the conservation programs’ incentives, communities installed devices lowest conservation gain first.

Rather than repeat such mistakes, the MWRA hired Arthur D. Little, a well-known management and consulting firm, to help set up a pilot. “We look a direct install method,” says Estes-Smargiassi. “We’ve ended up with a model where we had folks knocking on doors with walkie-talkies, and as someone said, yes, they were interested, we scheduled the crew in the neighborhood within the next five to 20 minutes. So there was no chance for them to change their minds.”

Accountability again guided the MWRA’s reimbursement policy. Contractors had to install at least one showerhead and one displacement device within a home, and the homeowner had to sign a confirmation form. Estes-Smargiassi was concerned about customer satisfaction and kept plumbers on call to go back for damage or repairs and did background checks on staff and contractors. “Despite the fact that we were raising rates we got a 95% satisfaction rating from this program,” notes Estes-Smargiassi. “People love the fact that we were helping them control the water costs even as we were raising their rates. They also liked the information we gave them about conservation and it motivated them to get the water saving devices. So from a public relations perspective and water savings, it was pretty effective.”

Beyond the residential program, the MWRA developed an aggressive program for detecting and repairing leaks in its 270 miles of pipes, and the member community’s pipes (6,000 miles). The agency found its most significant savings from leak detection, though enlisting its wholesale customers was a bit of a battle. The effort began with the MWRA hiring contractors to do leak detection on every mile of community pipelines. The results were given back to the communities with the expectation that problems would be promptly fixed, though again, accountability was built into the scheme.

“We provided the information initially to the city’s water superintendent, but we wouldn’t widely publicize the results,” explains Estes-Smargiassi. “If they didn’t respond seriously, the information would gradually move up the management ladder, so we got people’s attention pretty quickly.”

Although the cities were happy about the savings, Estes-Smargiassi found that water superintendents were often denied funds for annual follow-up detections, and it became difficult to create long-term momentum. The solution was to implement regulations that required communities to do leak detection every other year. To facilitate the process, the MWRA issued technical assistance contracts and solicited for competitive price-per-mile bids for leak detection.

“The cities didn’t have to go through all the procurement issues and we did the contracting, so all they did was sign a promissory note,” says Estes-Smargiassi. “It required much less bureaucracy from them and we only picked good contractors. The unanticipated side benefit of that was that we established the ceiling for prices. Leak detectors would have to be competitive to get our contracts.” The deal was sweetened further by deferring payments. Cities were billed twice a year, and the water savings typically exceeded the leak detection costs.

The leak detection program has seen dramatic results, but Estes-Smargiassi notes that systems with pipelines over 100 years old take decades to force down their total leakage count. “Every time you find leaks and fix them you’ll find new ones next time,” he says. “And on the wastewater side new repairs in one area can cause new leaks in another.”

The MWRA rounded out its water conservation strategy with public information and school education programs, plus water management programs, municipal buildings, and nonprofit organizations. Meters were improved to track and analyze community water use, and the state plumbing code was changed to require new 1.6-gallon toilets.

Today, demand continues to drop, even though new communities have become customers of the MWRA. “We have a substantial surplus and where we were once using 340 million gallons per day, our goal was to be at a moderate level below 300 million gallons per day, and we’re now down to 230 million gallons per day. So we have water to solve local problems such as where people are taking too much out of a river, or where a well is contaminated.”

There is no substantial surplus of water currently in California; nor does the Metropolitan Water District (MWD) expect any in the future, so conservation is critical. The MWD imports water from the Colorado River and northern California for its 26-member water agencies, providing 60% of the water to a population of more than 17 million.

Population growth and limited supplies motivated the MWD to initiate the typical conservation incentives: low-flush/dual-flush toilets (more than 2 million pre-1992 toilets have been replaced), high-efficiency showerheads, and high-efficiency washing machines. However, California’s industrial sector, plus its demand for landscape irrigation, both residential and commercial, required a special focus.

“We’ve been working with our 26 agencies to get into business and help industry use water more efficiently,” says Tim Blair, MWD’s water use efficiency program manager. “That includes reworking industrial processes and even going into the back rooms of restaurants and looking at how they rinse their dishes.”

For example, restaurants typically use large commercial dishwashers that have conveyor belts with trays, and the contents get a pre-rinse spray. The MWD sponsored research through the California Urban Water Conservation Council to look at ways of setting standards for the pre-rinse spray valve, because it had a large flow yet low pressure.

“We went from the development of the valve to a state and national standards that are already approaching somewhere around 50% of saturation within a five- to six-year time span,” notes Blair. “We offered incentives and a direct install program. We had people out there on the streets knocking on restaurant doors and offering to replace the valve for free and take the old one out of circulation so it didn’t show up later on eBay.”

Further restaurant water savings came from a new tool for using water to clean the surfaces outside the serving preparation area. In normal circumstances businesses are not supposed to use water to hose down floors and paths, but because of food service and the possibility of infestation it’s required. Rather than use a standard hose, the MWD advocates a “water broom” designed with high-pressure nozzles so it washes down surfaces with much less water.

Large restaurants and cafeterias often use food steamers to keep cooked food at a safe temperature. They were designed to operate with a constantly flowing water supply, but the MWD found new designs that use a static tray of water so they only need to drain and refill twice per day.

“Rebates and incentives on equipment are one indication that we are concerned with conservation,” says Blair. “We also give incentives for industrial process improvements. So if a company comes in and shows us a way that can save water we have a program to help them economically. In the area of T-shirt manufacturing there’s a lot of water used in dying, and we just funded a way of recirculating the water supply to reduce consumption. In the metal plating industry we are a participant in a program that reuses water to reduce consumption.”

Of course, low-flush toilets are recommended, but the MWD also encourages zero water urinals. They use a chemical seal in place of the usual water trap that keeps gases from coming back up through the drain.

For hospitals, the MWD has rebates on X-ray film processor equipment. Many hospitals are switching to electronic imaging and digital X-ray equipment, but those using standard X-ray film waste a lot of water to develop the film. The rebates cover recirculation and filter devices.

Those same hospitals, and most major buildings in southern California, use cooling towers that run water over the vent system to control the air conditioning in buildings. The water goes through a cycle and its pH and chemical makeup changes. Before the MWD developed pH controllers, the water was flushed to prevent deterioration and calcification. Now it’s recycled many times.

The potential for savings in landscaping were critical to the MWD. “Landscape is a very important sector for us,” says Blair. “About 50% of the water for single-family homes is used outside. There are some great new innovations for controlling water usage, mostly through a weather-based irrigation controller.”

The new technology can use local weather readings, a temperature gauge, a rain check shut-off valve, or a telemetry communication system to use weather information that sets watering schedules to forecasted conditions. For example, one week it will set a system to water three times for 10 minutes per day, based on the types of plants and soil and weather factors, such as precipitation and wind conditions, which can alter the evaporation off the land.

“Recycled water is excellent for landscapes,” adds Blair. “It’s highly treated wastewater that meets federal and state standards for certain usage. We have numerous customers close to existing wastewater treatment facilities and in some places they’re able to tap a wastewater line passing by their location. We encourage recycled water for golf courses, universities, and a lot of areas that have large landscapes that need watering.”

The systems are finding their way into new homes, thanks to the MWD’s water conservation partnership with the California Building Industry Association. The target is water efficiency standards for new homes that dictate 30% less water usage. The California Building Industry Association has adopted new plumbing codes and building practices as one method of meeting its green building initiative.

“We have a couple of different pilot programs,” Blair explains. “The first one gives an $0.80-per-square-foot incentive to the builder. We estimated the cost to change to higher-efficiency sprinklers and irrigation controllers. The typical home with 2,000 square feet of landscapes cost about $0.80 per square foot more money. That’s about a $1,600 price tag on a home anywhere from $300,000 to $500,000. We also extend this to inside fixtures so the clothes washers and high-efficiency toilets get incentives.”

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Ultimately, the MWD’s conservation programs saved about 66,000 acre-feet per year, or 59 million gallons daily. Residents replaced more than 2 million inefficient toilets with 1.6-gallon-per-flush models, and a conservation credits program put 3 million high-efficiency showerheads and 200,000 faucet aerators into homes. Surveys gathered data from 60,000 households, and the program did 2,000 large landscape irrigation audits plus 1,000 commercial water use surveys.

All told, the MWD’s incentive program performed well, but the pressure to conserve hasn’t ceased. All of the agencies and suppliers interviewed noted that growing populations and fragile water resources mean the search for effective conservation programs will continue.

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