Managing domestic water demand
The case for metering and volumetric charging
Wellington, January 13 2009
In this release the CEO of the New Zealand Water and Wastes Association, Murray Gibb, discusses the issues relating to
the ongoing management of our most precious resource – water – and suggests a set of management solutions for now and
the future.
With another dry period upon us territorial authorities up and down the country are juggling to ensure sufficient water
is available to get through to the autumn. A suite of instruments are being rolled out to moderate demand; education to
increase awareness of the need for conservation, restrictions or outright bans on non–essential high use activities such
as watering of gardens, and more vigilant detection and repair of leaks.
By and large communities are comfortable with such policies to manage demand during dry periods. Others that meet public
acceptance include encouragement in the use of efficient technologies such as dual flush toilets, along with ‘water
efficient’ appliances, collection and use of rainwater and ‘grey water’ at individual dwellings.
Some water conservation policies aren’t so popular. Perhaps because it is so abundant New Zealanders feel they have a
right to unlimited high quality water.
A proposal for low flow shower heads for example was quickly shelved during the recent election and metering and
volumetric charging is equally, if not more, unpopular in some quarters.
The fact of the matter is however that where other methods of managing water use may be moderately successful, metering
and volumetric charging is the most effective tool to change water use behaviours. Consistently, both locally and
internationally where metering and volumetric charges have been introduced, peak demand has been reduced by between 20
and 40%.
In Nelson for example, when this regime was introduced several years ago, peak summer demand reduced by 37%. This result
shows us that when forced to confront our water usage based on a direct cost there are major savings to be achieved.
Our Association’s vision is to ensure water for our future. We support metering and volumetric charging for several
reasons.
Economically it is more efficient to manage demand than simply increase supply. Water supplies, along with waste and
stormwater management systems are big ticket items.
For the period from 2006 to 2016 New Zealand’s 73 territorial authorities have allowed for over $22 billion in capital
and operational expenditure across these ‘three waters.’ Going into a serious economic downturn it makes sense to make
the best use of scarce money.
Cost/benefit analyses of metering and charging indicate that associated capital and operating expenditure produces a
high rate of return. One Council has reported that the introduction of metering delayed estimated capital expenditure of
$75 million on water supply investments for around 10-12 years.
Local authorities also face significant cost in removing and processing wastewater. There is a directly proportional
relationship between the volume of water used by household residents and the volume of wastewater required to be removed
and processed. Reducing demand for water reduces the volume of waste water required to be transported and processed.
More recently the aforementioned Council estimated $30 million to $40 million of wastewater treatment investment could
be deferred for up to eight years. These savings resulted from the $9.7 million cost of installing metering in every
household.
These are compelling numbers in anyone’s language but metering has other advantages.
Because its price is not readily visible in rates demands, public awareness and appreciation of the value and cost of
the supply of water is low. If the price and use of water were directly connected, as they are for other private goods
that attitude would change. How frugal would we be if the cost of fuel was bulked up in uniform annual charges against
private property, oil companies were recompensed by territorial authorities, and motorists filled up at the pump at no
charge?
The debate over metering and volumetric charging surfaces when supply is under pressure, and big ticket items are
contemplated. Wellington is a good example of this.
The captial’s water supply is getting stretched. Options include spending $140 million for a new dam to increase supply
and $55 million for meters and imposing a direct charging regime.
Looking to the future it is more than likely that where there is pressure on water supplies regional authorities will
require evidence of demand management as conditions on consents. In a country with abundant water this is not just
fanciful. Environment Waikato is proposing a variation to its regional plan requiring water management plans to be
supplied by applicants seeking water takes for municipal supply.
Another consideration in this debate is how the current application of uniform annual charges to reticulated domestic
dwellings produces inequitable economic outcomes. High volume users are being cross subsidised by low use householders.
Metering and volumetric charging for domestic water supply is currently employed by 11 of the 73 territorial authorities
in New Zealand. A further eight Councils have metering in some areas of their respective jurisdictions. The average
daily per capita water use across Councils that impose volumetric charging for water supply is typically in the region
of 200 litres. This contrasts with figures of over 700 litres from some without metering and volumetric charging.
On environmental, economic and social equity grounds the case for metering and volumetric charging is compelling.
Ends