Cost-Effectiveness of Urban Water Demand Management Programs

During droughts, potable water agencies may need to increase supply or reduce demand. Water agencies have many options for water demand management (WDM), including low flow toilets, showerheads, faucet aerators, educational outreach, and more. Reduced water consumption may result in energy savings, both at the customer and utility level. In this study, we estimated household water, electricity, and natural gas and utility-wide energy savings using statistical modeling for four large water demand management programs implemented between 2014 and 2018 in California. These programs focused on single and multifamily retrofit programs. These retrospective analyses were performed using household-level data gathered from multiple water, electricity, and natural gas companies. We found detectable water savings in three of the four programs, no detectable electricity savings for any program, and detectable gas savings in only one program. The deemed estimates of water savings were generally inaccurate predictors of actual savings. All programs that reduced household water consumption also reduced system-wide electricity consumption. A benefit–cost analysis was performed for each program from the perspectives of three stakeholders: water utilities, households, and a regulatory authority responsible for greenhouse gas emissions (GHGs). Many of the program actions were not cost-effective for the participating utilities and households because of the low cost of water. For the WDM programs considered here cost-effective from the perspective of the water utilities, the opportunity cost of consuming an additional unit of water would have to exceed their observed variable production costs in 2020 by a factor of 3 to nearly 20, dependent on the utility. In settings with sufficiently severe drought conditions and impending water scarcity, it is certainly plausible to expect that the opportunity cost of water consumption could reach such levels. WDM is an effective method of reducing GHG emissions for programs that target hot water savings, and the cost of these programs was consistent with non–water-related programs that target GHG emission reductions.