Private utilities are better at conserving water than public ones

Manny Teodoro, a Texas A&M researcher who’s been doing important work on municipal utility governance and rate structures, has an update today on the 2018 California water conservation data.

Point one, which is important given some breathless and totally premature journalism last year about California’s water conservation post-Big Drought, is that municipal water use remains lower than the 2013 benchmarks when the state began its aggressive statewide mandatory water conservation efforts. Even as drought pressure has abated, conservation behavior has stuck.

Point two is that private utilities continue to perform better than public utilities in terms of conservation:

Overall urban water use remained significantly lower in 2018, with average monthly conservation of about 14% compared with 2013. The public-private disparity in overall conservation also persisted.

This seemed counterintuitive to me when I first came across Teodoro’s findings. But his explanation makes sense, and is consistent with other research suggesting a connection between governance structure and water conservation performance. His essential argument is that municipal management, more directly accountable to voters, faces, in his words, “political headwinds” in implementing things like rate hikes and mandatory watering restrictions. Private utilities, accountable to state regulators rather than local voters, have a relatively easier time of implementing such measures, he argues.

2 Comments

  1. John – Your post raises a question about the conservation performance of the Albuquerque Bernalillo County Water Utility Authority. It is an entity of the state of NM and reports to the Office of the State Engineer, but its Board is made up of a rep from the Mayor’s office, 3 City Councilors, and 3 County Commissioners. While still public, its structure and governance should remove the officials on the Board from some public pressure, since Councilors and Commissioners are elected based on other issues than water and sewer rates. Nevertheless, the annual conservation improvement rate when the Utility was run by the City (the City connections make up something like 95% of the total connections) was about 2x the rate under the Utility. Collectively there has been great progress on conserving water, but more of the credit should go to the City, especially because it was the City that reversed the unsustainable upward trend of water consumption and did it when growth rates were generally higher than under the Utility. Both the City and the Utility outperformed the private water utility in the area, which the Utility absorbed in part to reverse the overpumping that NMUI practiced.

  2. In today’s system, it is more likely that the Government can be bullied while the Company can do the bullying.

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