Recession Leads to Drop in Water Use, Increase in Rates

You would think it would be good news that we are curbing our water use. But it is not such a great development if you are in the business of selling water.

The recession has caused industries to slow down or close, and that means less water use. Empty, foreclosed houses mean water companies lose income. The water companies have laid the infrastructure to reach homes and businesses, but now that capital just sits there, producing less or nothing at all.

The Associated Press reported

"A recent study by the Water Research Foundation, a Denver-based nonprofit, on the recession's impact on water utilities found that home foreclosures and business contractions have reduced water demand in many areas. Cities with high unemployment also have seen reduced water consumption as people move away in search of jobs, said Rob Renner, the foundation's executive director.

'" 'It depends on where you are in the country. Regionally, the economy is better in some places than in others,' he said.

"Water companies for the most part get their money from customers. When water consumption goes up, revenues go up, but when consumption falls, so do revenues.

"Water companies often raise rates to pay for high-priced capital expenditures, such as new water lines or treatment plant expansions. But they also have to hike rates when water use goes down to bring in enough money to pay their basic operating costs.

"Water rates are based on a wide range of factors, such as infrastructure and water treatment costs as well as revenues from water use. When water use falls, that would be a reason to seek a rate increase, Renner said."

I am seeing stories around the country of big water rate hikes on the way:

  • In Mesa, Ariz., water users are looking at a 25 percent rate hike over the next five years.

Is it time to consider rain barrels to save water?

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    Al Tompkins

    Al Tompkins is The Poynter Institute’s senior faculty for broadcasting and online. He has taught thousands of journalists, journalism students and educators in newsrooms around the world.


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