Bacon's Rebellion

Democracy Thrives in Sunlight

RTD Catches Up to Bacon’s

—

by

James A. Bacon
in

On the idea of using a sliding price scale for water use:

It might take action by the General Assembly to permit such price flexibility, but consider the likely result: Everybody would conserve more — at every spigot and tap. Those who water their lawns three times a week might find they really need to do so only once a week. Those who take 15-minute showers in the morning might realize they can get just as clean in five — and that they can rinse out a coffee cup by hand rather than running it through a cycle in a nearly empty dishwasher.

Few people would find it necessary to wash their cars daily — yet those who absolutely had to do so could. They would simply have to pay painful sums for the privilege.

Sounds good to me.

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26 responses to “RTD Catches Up to Bacon’s”

  1. Anonymous Avatar
    Anonymous

    Glad to see you and Hinkle are catching up with the Green Party:

    http://nearwestendnews.net/2007/10/17/richmond-greens-challenge-mayors-water-rates/#comment-542

  2. Anonymous Avatar
    Anonymous

    This is really a sick idea. If a gallon of water costs 5 cents, why should two gallons cost 20 cents? Who decides the second gallon is a waste?

    Just because I have twins, I should pay four times as much to keep the second one clean?

    Idiots.

  3. Lyle Solla-Yates Avatar
    Lyle Solla-Yates

    Norman-

    Fantastic news, I hope it catches on. To clarify for Anonymous 10:24, I’m not cheering for Henrico or Richmond’s arbitrary pricing cutoffs. They’re ineffective at best. I’m cheering for what we usually call price gouging. If there’s less water, and we want to ration it efficiently, the absolute best way is to use pricing. At the same time, government should be prepared to provide emergency water supplies to those most in need, to balance equity issues. The money generated can be used to invest in water efficiency. What’s not great about this?

  4. Jim Bacon Avatar
    Jim Bacon

    Anonymous, The Green Party is catching up to Bacon. On Sept. 3, 2002 — five years ago — I wrote a column, “Dearth of Water — or Ideas?”, advocating price as a mechanism for rationing scarce water resources.

    I still stand behind the idea of cranking up rates for big water users, even though it will mean a substantially larger water bill for the Bacon family now that we’ve installed an irrigation system for our large, suburban yard. In times of scarcity, water guzzlers like the Bacons should pay more!

  5. Larry Gross Avatar
    Larry Gross

    Just out of curiousity – why is this kind of pricing structure good for water .. but (I suspect) bad for… say gasoline or milk?

    so .. why is this justified for water or perhaps electricity?

    I have my own thoughts but thought I’d ask others..

  6. Jim Bacon Avatar
    Jim Bacon

    Larry, Interesting question. At first, I thought it would be easy to answer. But as I tried to, I tripped myself up in all sorts of contradictions. Now, I’ve decided, I don’t have time to think it through — I’ve got new content to post. Why don’t you take a whack at it?

  7. Anonymous Avatar
    Anonymous

    Prices for gasoline do change according to demand. That’s why gas today is nearly 3 bucks a gallon, whereas it was flirting with a dollar just a few years ago. And with global demand rising, prices will probably rise even more (the Journal has a piece today about how home heating oil users are going to get whacked by a huge price increase due to higher crude prices).

    As for milk or, say, sugar…remove the market-distorting government price supports, and the grocery store price might just fall. A lot.

    Norman

  8. Lyle Solla-Yates Avatar
    Lyle Solla-Yates

    Larry-

    When I read your comments, I immediately thought of natural disasters like hurricanes and how they used to cause hoarding when I was growing up in Florida. As soon as it was announced there was a hurricane, people rushed to the stores to stock up and buy everything there. The stores didn’t see it coming, so they didn’t change their stock or pricing, so they sold out of everything pretty quick, and some people just had to make do with less than they needed, or pay outrageous prices on the street. Or loot.

    This is neither fair nor efficient. At least now, we have better supply chains and forecasting, so retailers can stock enough to meet demand ahead of time.

    So I think markets and pricing work in all those instances, but ideally government should be prepared to fill in the gaps, rather than regulate first and work with markets last.

    For example, rather than fix the price of gasoline and enforce rationing during the oil crisis, creating shortages and lines, Carter would have better chosen to let the market work, release some oil strategically held onto the market at market prices, encourage carpooling and conservation in the press, put a small windfall tax on oil companies to help out those hardest hit by the pricing, but allow those companies to keep a large portion of the windfall to encourage greater investment.

    This arrangement would have been less expensive, less disruptive, more fair, and would have led to a faster recovery. People would complain about the prices, and then they would respond to them.

  9. Anonymous Avatar
    Anonymous

    The price of Cabbage Patch dolls varies with supply and demand, too, and also baseball cards. But I’m not sure the government has any business raising prices by creating an artificial shortage to begin with.

    Yes, the price of gas goes up, but the price of the first gallon is the same as the price of the tenth gallon, unlike what is proposed for water rates. Even with gasoline, if you buy enough, you can get a lower rate, not a higher one. (Unless you buy so much that you create a shortage.)

    Variable rates for water is an entirely different concept from smart electrical metering which may or may not decrease usage, but is intended to even out the flow. You might make the same argument for HOT lanes, they may not decrease usage at all, but shift the usage in time. It is still a savings in capital costs, but not necessarily in VMT.

    If the price of gas goes up, I work to use a little less to save myself money, but not if the gas useage provides me more money than it costs. If I do save a little gas, it simply means the price is marginally lower for whoever else buys it. Presumably, I have saved the money because it have some other use for it. In the end I have neither the gas nor the money, and I have made a value judgement, not a savings.

    It is easy to be disdainful about people who liberally water huge luxurious lawns, but would we feel the same about watering stately chestnut and pecan trees? Or seriously cleanig our schools to help prevent MRSA? A graduated pricing system necessarily places value judgements we are presently unprepared to make on different uses of water. I’ve stayed in hotels that use water saving showers and low flow toilets (mostly for political correctness) and appear to use far more water than they save in the showers on their landscaping and pools.

    My value judgement is that I might rather have a decent shower, rather than trying to bathe in what amounts to a heavy fog. Still, I enjoy the greenery.

    On the one hand we complain about excess runoff, and then we claim we have a water shortage. At the same time, a major cause of high sewage treatment costs is infiltration of excess water into the sewer lines. Which is it?

    My plantings need an inch of water a week. If it rains three inches, do we call that wasting water? If it doesn’t rain, and I use no more water than I need, it still appears to the meter as excess or increased usage. I’m going to get charged a higher rate, just because of variations in the weather? Are you going to give me credit when it rains three inches, and I send two inches on its way, down to the reservoir?

    So, we raise the water rates and this changes everyone’s value judgements a little, with the result that the reservoir has a few more inches of water in it. That water is producing no revenue for the water company.

    Or else, the change in price makes some activites more worthwhile than others, and the water company gets more money for the same water. No water is “saved” and the reservoir is the same. We have heard some commentators here say that the right thing for the government to do when they have excess money is to give it back!

    So, why raise the rates or make graduated rates in the first place?

    Unless the real purpose is to impose your value system on others.

    We might actually be able to make a financial case for doing that, but fisrt we have to agree on a price for all those intangible values.

    RH

  10. Anonymous Avatar
    Anonymous

    If you use gasoline, it’s gone. If you use water, it is always recycled. Some is recycled for free, and some we pay for. If we are going to charge variable prices for water, we should charge more for water that winds up going to paid recycling.

    RH

  11. Larry Gross Avatar
    Larry Gross

    well I got tangled up also and it pains me to have something that seems arbitrary or even contradictory in concept that cannot be rationally explained.

    At first I thought this might be a government “thing” but then I’m reminded of “two for one” sales which say “quantities limited or 2 widgets to a customer”…

    or our nifty cell phones..$200 phones for “free” or almost free.

    except those free phones cost you a 2year commitment to buy cell phone minutes at a certain rate no matter how much a better deal you might find later on.

    Loss Leader:
    a type of pricing strategy where an item is sold below cost in an effort to stimulate other, profitable sales. It is a kind of sales promotion. (wiki)

    now this makes perfect sense for business some business purposes but if this works so well.. then why isn’t this also done with milk or gasoline?

    You know.. the first 8 gallons for a buck a gallon, and the next 8 will cost $5 a gallon…

    ahh.. the light bulb suddenly goes on and everybody and their dog realizes why this won’t work.

    They can’t make you buy your gasoline ONLY at their station for two years at a much higher price for all gallons over 8.

    The price of water is predicated on the same basis that the price of cell phone service.

    Those cell towers have limited capacity. More capacity means more cell towers – which cost money.

    Water (Reservoirs) are very expensive and do not produce unlimited water.

    Rather they provide a certain daily output and they cannot be expanded just because more folks want more water.

    The planning of a reservoir is predicated on per person daily useage for a set cost – per person.

    If some people use more – then others will have to use less because you cannot expand the supply for a reservoir that has a set capacity.
    If the planning projections are exceeded and the average number of gallons useage goes UP then the reservoir now cannot serve as many people.

    so this is NOT a compeitive market environment and worse.. there is a finite supply that cannot be easily or quickly expanded when demand goes up.

    So.. basically.. you’ve got to ration the water if everyone is going to get a minimum amount (especially when a drought actually reduces the supply).

    So.. how would you ration water?

    Would you install a meter that automatically shut off until the next day when the allocated ration was used.. no matter if mom was in the middle of washing diapers or not for THAT day?

    Or would you .. let folks use as much as they wanted each day and then if they used their ration all up for Friday.. tough luck – no water until Monday?

    So.. just how do you force folks to NOT use more than their equitable share?

    Well.. your other alternative is a kind of a “black market” where things that are in short supply – are available – for a price.

    So… at the end of the day… this way of pricing water .. most resembles the black market!!!

    Now… let’s see if we can spread this to settlement patterns…

    🙂

  12. Larry Gross Avatar
    Larry Gross

    so.. if we could… this is an evil question – be forewarned..

    if we could..

    sell gasoline at say 2 bucks a gallon for each persons equitable share.. and everything over that cost progressively “more”,

    should we?

    You gotta admit.. we’d turn into Europe overnight.. right?

    🙂

    We could do this with a simple “credit” card that had to be used every time you gassed up.

    In other words.. when you used the “special” credit card -you’d get really cheap gas.. but it would only let you have a set amount before the remaining gallons would cost $4.00 a gallon (with the new $1 a gallon gas tax for new roads).

    see.. I told you this was an evil question..

  13. Lyle Solla-Yates Avatar
    Lyle Solla-Yates

    RH-

    Absolutely, if you’re using water that is not scarce where you are, then releasing it into the environment in a way that won’t harm anything, then there should be no cost, except the capital cost of getting, using, and releasing the water.

    On the other hand, if you’re using water that is scarce where you are, then releasing it so that it needs to be cleaned for recycling, then you should pay the market price to get the water, and pay the market price to clean the water.

    And absolutely, if you have a productive use for market rationed water, where the more water you use, the more money you make, then fantastic, do it. On the other hand, if water use can be economized to save money for something else without harming revenue, then great, do that.

  14. Anonymous Avatar
    Anonymous

    Thank you Lyle, I’m glad someone gets it.

    Next question. suppose you are required to hold land throught eh zoning ordinance. And part of the reason for the zoning ordinance is qualtiy of life. The way this is effected is to create a situation where more water falls on the land than is used, or is allowed to be used, or can reasonably be expected to be used by resticting the land use. This inreases the quality of life for others.

    In that case you are effectively required to release water for others to use at no cost, and all the capital cost of getting and releasing that water falls on the landowner.

    Should the landowner be paid for being a water provider?

    Hint: some places already do this.

    RH

  15. Anonymous Avatar
    Anonymous

    “if you have a productive use for market rationed water, where the more water you use, the more money you make, then fantastic, do it.”

    That’s great, but what if someone else has a different idea of what the equitable use should be? I use water in my business and my business makes so much money that it returns a lot of taxes and employment to the community.

    Some other business uses either less or more water, but it returns less to the community in dollars per gallon used.

    My business is a jello wrestling emporium. I reycle all my jello by mixing it with oatmal and feeding it to the cows.

    What do you suppose my chances are of getting a fair water price?

    RH

  16. Larry Gross Avatar
    Larry Gross

    well.. I understand that car washes that recycle their water can continue to operate.

    The was an intersesting article in the NYT about Aurora, Colorado.

    They’ve put pumps in 30 miles downstream of their town to slurp up ever drop of the water they discharged from their treatment plant.

    The FIRST municipal recycle system!(sort of).

    Why would do they such a thing?

    Simple.. every drop of water is already spoken for and scientists are now saying that reservoirs like Lake Mead may never refill in our lifetimes.

    …”personal water consumption is between 200 and 300 liters per day
    when the industrial and energy production usage is added in to the equation,fresh water usage exceeds 5,000 liters per day on a per capita basis”

    http://www.newton.dep.anl.gov/askasci/gen01/gen01629.htm

    See .. you could recycle with your own business… too.

    and you’re going about this all wrong. Feed the cows the water/oatmeal first… then recycle their used water for your wrestling emporium.

    the ultimate in recycling AND you’d have the satisfaction of knowing that you did this without a “handout” from anyone.

    they’d put you on TV… and tout your ‘green’ credentials.. too!!

  17. Anonymous Avatar
    Anonymous

    I’d need the same amount of water input either way, but your recycling plan is much more expensive.

  18. Larry Gross Avatar
    Larry Gross

    …”much more expensive”

    to who? you or the supplier of the water?

    Water would be cheaper to provide by far if everyone used their own recycling systems – right?

    We’d go from each person needing 300-400 liters a day to.. probably on the order of 30-40 net fresh water intake.

    We’d need smaller reservoirs and smaller distribution pipes…

    we’d easily weather “drought” and not have to “ration” water.

    Sewage treatment would be far less expensive also.

    Cleaning up the Chesapeake Bay and our Rivers would be far cheaper also.

    There’s actually some folks who believe that we should have separate plumbing systems. One for “black” water and the other for “grey” water.

    Anyone who owns a RV knows what I’m talking about.

    If we built homes that separated grey and black water – we’d have cheaper sewage treatment costs – and far, far less nutrient damage to the rives and the Bay.

    so the next time we hear about a developer offering a “GREEN” multi-use development, let’s ask what is environmentally “friendly” about it’s water use…

    Now THAT .. WOULD BE the ultimate in GREEN Credentials… virtuall zero discharge

    In fact, if you separate black from grey water – you can actually convert the black water into (UV-treated) compost… to be spread on the lawns instead of fertilizer…

    right?

  19. Anonymous Avatar
    Anonymous

    I’m gonna use (buy) the same amount of water either way, I’m going to recycle the same amount of water either way. Your recycling plan is more expensive.

    Why would you want that?

  20. Anonymous Avatar
    Anonymous

    “Water would be cheaper to provide by far if everyone used their own recycling systems – right?”

    Nope.

    Think about it for two seconds.

  21. Larry Gross Avatar
    Larry Gross

    Are you aware of a pollution concept called TMDL and it’s implications for the cost of water?

    Total Maximum Daily Load (TMDL). The sum of the individual wasteload allocations (WLAs) for point sources..

    Wasteload allocation (WLA). The portion of a receiving waters’ loading capacity that is allocated to one of its existing or future point sources of pollution.

    http://www.deq.state.va.us/tmdl/glossary.html

    Note the allocation part. The standard will no longer be thresholds for percentages of pollutants like nitrogen but instead the total pounds of nitrogen allowed for that pipe – REGARDLESS of how many connections – existing or projected.

    In other words, you cannot increase the number of pounds resulting from adding new connections.

    you ARE limited to the total pounds.

    Solution: expensive technology to remove more and more pollutants. oops there are those job-producing environmental widgets again.

    and hey… this sounds like a classic ROI… where you figure out how much pollution the river can accept without harm and then you charge what it costs to treat the water to meet that standard.

    right?

  22. Anonymous Avatar
    Anonymous

    I have only collected and measured samples for TMDL’s a few thousand times.

    Yes, I know about TMDL’s. Do you? Do you know how the standard for “maximum” is set?

    “Solution: expensive technology to remove more and more pollutants. oops there are those job-producing environmental widgets again.”

    This is an idiotic idea. Those jobs producing environmental widgests won’t be profitable unless the jobs causing the need for them are even more profitable.

    You can, of course, mandate the use, and therefore the manufacture of widgets even when they won’t pay, but that would be a subsidy, I think.

    ——————————-

    Based on your previous ideas, I would guess that whoever got there first would enjoy the costs associated with the lower early costs of removal, but the next guy would have to pay his full marginal costs, so as not to impose additional costs on the first guy.

    RH

  23. Anonymous Avatar
    Anonymous

    You ARE limited to total pounds. Atlanta was limited on how much water they required to release from their reservoir.

    Ther ARE limits on construction where the Mexberlin wall is going too.

    When the price is right, we will figure out what to do and how to pay for it.

    Values change.

  24. Larry Gross Avatar
    Larry Gross

    re: “but the next guy would have to pay his full marginal costs, so as not to impose additional costs on the first guy.”

    partially – connection fees would go up because of capital investments to essentially “buy down” new capacity.

    but operational costs for all those who are hooked up would be the bigger cost increases – allocated to both exiting and new users.

    but I still don’t think you get it.

    What this allocation scheme does – is to place real costs on growth but especially so .. on watersheds that do not have much capacity to absorb additional pollution.

    In other words – the locational-variable costs could vary Considerably depending on how much “available” pounds there are on different watersheds.

    This could have a profound impacts on where new development could occur or not – at least on a cost-benefit basis.

    Say NoVa is at the limit of the number of pounds that they can release into the Potomac but upstream.. there is still some capacity.

    A developer would have to weigh the costs of “buying pounds” from NoVa or building somewhere else where “pounds” are much cheaper.

    Also.. per your love of markets. “Pound” credits could be bought/sold. So a locality with an exising plant could incorporate new technology.. essentially “buy” more pounds that could then be marketed to the highest bidders.

  25. Anonymous Avatar
    Anonymous

    “This could have a profound impacts on where new development could occur or not – at least on a cost-benefit basis.”

    Absolutely. Toll roads or Hot lanes, and higher taxes and prices for all things in Urban areas.

    But I don’t think a Market for TMDL’s is going to work the same as the market for global pollution. Buying down TMDL’s in some other watershed isn’t going to work.

    You are the one that doesn’t get it: “connection fees would go up because of capital investments to essentially “buy down” new capacity.”

    The amount of TMDL’s you want to put in the river are exactly the same as the ones the new guy wants to put in, and they both contribute equally to the total load. Everyone that wants to dump should expect to pay similar costs. If your TMDL’s weren’t already there, then he wouldn’t be the one pushing the limit.

    Each TMDL contributes equally to the need for new capacity and the copst of new capacity should be shared equally. Your plan is nothing but primogeniture.

    Worse, operating costs would probably go down, per user, not up. You would get a windfall from spreading the costs further while sticking the new guy with the bill.

    Except, probably the new guy moves to the next watershed, or the next country. Fat lot of environmental good that does.

    Wouldn’t it be better to work a deal that keeps him here, and keeps us all under the TMDL limit? (Assuming the new guy is worth having in the first place.)

    The idea that you stuff doesn’t stink as much just because you got there first is odoriferous to the max.

    RH

  26. Larry Gross Avatar
    Larry Gross

    “Buying down TMDL’s in some other watershed isn’t going to work.”

    correct – that is why you cannot do that.

    This is actually your concept. You advocate an ROI. The river/watershed is accessed for how much pollution it can acommodate.

    “The amount of TMDL’s you want to put in the river are exactly the same as the ones the new guy wants to put in,”

    I do not put TMDLs in a river and neither do others – TMDL means Total Maximum Daily Load – for the RIVER – no matter who is polluting.

    “If your TMDL’s weren’t already there, then he wouldn’t be the one pushing the limit.”

    If I was already drinking the water it would be there also? If I already did not have a house – then you could build a house on the same land.

    and so.. when you come along.. we tear down my house so you’ll have a place to live because to not do that would not be fair to you?

    “Each TMDL contributes equally to the need for new capacity.”

    you don’t get it. There is no new capacity. The capacity is unchanging. The difference with TMDLs is that you cannot ADD new sewage connections if they result in more pounds of pollution than you are allowed.

    The only way to add new connections is to upgrade the treatment plant to remove the excess pounds so that you stay within the allocated pounds.

    “Worse, operating costs would probably go down”

    the operating costs do not determine the TMDL at all.

    “You would get a windfall from spreading the costs further while sticking the new guy with the bill.”

    in reality – the connection for the new guy would not be allowed unless the plant was upgraded to remove the extra pounds from the new guy.

    Everyone would have to pay more – both existing and new.

    “Except, probably the new guy moves to the next watershed, or the next country.”

    Maybe… but not the next watershed because the law is being implemented to apply to all watersheds.

    Bottom line: we all have to pay to not pollute more than the river and the Bay can accommodate.

    “Wouldn’t it be better to work a deal that keeps him here, and keeps us all under the TMDL limit”

    Why would we want him here if he didn’t want to pay his fair share of the water supply AND the TMDLs to start with?

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