In the face of an epic drought, Californians are cutting back on their water use — some of them, anyway. Last month, the Center for Investigative Reporting revealed that one homeowner in Bel Air used 11.8 million gallons in a year, or about 90 times the amount of water used by the typical household.
This led to some hue and cry and efforts to out the homeowner. In a year in which drought shaming has become the state's favorite new pastime, this was entirely predictable. This customer appears to be the biggest residential water user in the state. So if anybody deserves to wear the Scarlet W, it's this guy.
However, the L.A. Department of Water and Power has refused to play along, and for good reason. The DWP has declined to provide names and addresses of its top water users, which can be withheld under state law. As DWP officials explained to CIR, these customers have broken no laws. They also represent a tiny fraction of overall water use, so shaming them into changing their ways — though it might make some people feel better — would not meaningfully reduce total water consumption.
Nevertheless, in the wake of the CIR report, the Los Angeles City Council and Mayor Eric Garcetti have sought changes to the city's water-conservation ordinance that would allow for fines for "excessive" use, whatever they decide that means, and which could entail disclosure of the utility's biggest water wasters.
But hold on a second. These customers paid for this water. If we want them to buy less of it in the future, why not try raising the price?
Water utilities have tried everything else to get people to conserve. In L.A., Garcetti enlisted a branding agency to spearhead an awareness campaign, which comes complete with social media integration and a cartoon mascot. The Metropolitan Water District has spent $340 million on rebates to encourage homeowners to switch from grass lawns to gravel. And agencies have encouraged people to rat out their neighbors for watering on the wrong days or having sprinklers that spray onto the sidewalk.
People, being people, have eagerly responded, leading drought-shaming campaigns against celebrities with lawns or anyone who would dare wash a car in their driveway.
But as every Econ 101 student knows, there is a much more efficient mechanism to distribute a scarce resource, and it's called price.
In Los Angeles, in the middle of a historic drought, water rates are actually lower than they are in many East Coast cities. According to this survey by Circle of Rain, the typical L.A. household pays $136 per month for water, sewer and stormwater bills. In New York, the figure is $153. In Boston, it's $186, and in Atlanta it's $326. (Mention this the next time your East Coast relatives start making fun of L.A. for running out of water.)
If L.A. water prices went up, guess what? People would use less water. Naming-and-shaming is not only ugly behavior; it's unnecessary.
"Normally there is pretty good responsiveness to higher prices," says Ken Baerenklau, a professor of political science at UC Riverside. "As long as the agencies are willing to raise prices more than just marginally, people respond to that just like they do when the price of any good goes up."
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The DWP is now proposing a series of water rate hikes over the next five years. The plan is to scrap the current two-tiered system, which hasn't curtailed demand. The new structure would establish four pricing tiers, with the biggest water users paying a premium rate. The DWP could probably push the upper-tier rates even higher, but there are political constraints involved. The City Council will ultimately have to approve the rate hike, presumably sometime in the spring.
CIR estimates that the Bel Air water waster's bill comes out to $90,000 a year, or $7,500 a month. How high would it have to go to get him to cut back? Who knows. Maybe a lot.
"I think there’s some people who, perhaps because they’re so wealthy, they’re not even seeing the bill," Baerenklau says. "The accountant’s paying the bill. They're using large amounts of water and they’re not even thinking about it."
Push it high enough and at some point the accountant will notice. Significantly higher prices would also send a message, in a way that no cartoon character can, that agencies are finally taking the drought seriously. And it's certainly worth a shot well before the DWP considers violating the privacy of its customers.