Basic economics on water saving

Insights Newsletter
13 March, 2015

This weekend I’m going to wash the house with a water blaster. I will probably also give the parched garden a good drenching, hose the car down, and then relax afterwards with a nice long shower. I might even run the taps for the hell of it.*

I will be doing this to teach Wellington City Council an economic lesson in response to their earnest plea for Wellingtonians to conserve water in the dry summer months.

As emotive as it is, an economic observer would note that the council is unlikely to see a dramatic drop in consumption without the ability to restrict access to water or an effective means to impose a penalty for overuse.

Individuals can, and often do, behave in a self-interested way that harms the common good, and in this case there is no real incentive for them to take a shorter shower. 

If only there was a dynamic mechanism that could signal to consumers that there was a resource constraint, which would sufficiently motivate the public to make rational decisions on an individual level without harming the common good.

Oh wait, there is, it’s called prices!

It was recently reported that the Kapiti Coast District Council reduced its peak day water usage by 25 percent after installing water meters a year ago, with residents cutting consumption to keep their bills down. Oh, sprinkler use is still allowed in the district.

To be fair, Wellington City Council has been pushing water meters for years, but it never quite manages to scrum up the political capital needed to get the measure over the line. It is just not as sexy as new bike lanes in suburbs that already have bike lanes (Island Bay), or a conflict museum in a city with a recently revamped National War Memorial. Oh, and don’t get me started on the fake beach just 800 meters from the real thing.

Instead there is a half-hearted voluntary scheme, where residents can opt to have a meter installed at their expense, but the piecemeal nature suggests there is never going to be sufficient scale to make installation economic for households.

Instead, next summer we can expect more sincere but ultimately useless appeals for the public to do the right thing and save water. I’ll be reading all about it while languishing in my third bath of the day.

* The author grew up in an arid country, and is not in the habit of wasting water.

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