How To Pay for a Water Conservation Program

Above: Aerial view of downtown Bozeman, Montana. The city recently implemented water policies to stabilize their water use under tremendous growth pressure. Photo by Diane Bentley Raymond

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I first met Mary Ann Dickinson a decade ago, while she was president and Executive Director of the Alliance for Water Efficiency (AWE), a nonprofit that works with more than 500 water utilities across the country. Mary Ann is a highly respected expert on urban water issues, with hands-on experience in many cities.

Mary Ann has been a thought leader on many innovative urban water programs, but one that really captured my attention a few years ago was AWE’s work to develop a model ordinance called “Net Blue.” The brilliance of Net Blue is that any new development cannot increase the city’s overall water use. The developer of any new project must find ways to fully offset their water use in the new development project, by investing in water conservation measures elsewhere in the community. The has the result of making developers pay for water conservation, while allowing new development to take place. The community benefits because owners of existing homes and businesses do not have to bear the increased cost of developing new water supplies to serve new developments.

The program also protects natural water sources from further exploitation by growing cities.

The Net Blue model ordinance can be readily adapted by any water utility wanting to stabilize their water use, and to do so in a way that makes sense for their community. You can get a look at the Net Blue ordinance by requesting it at this website.

I had the chance recently to catch up with Mary Ann, and take stock of Net Blue’s success. I’m hoping that many urban water utilities will give serious consideration of the power of Net Blue to finance a truly innovative water conservation program.

What motivated you and the Alliance for Water Efficiency to develop the Net Blue model ordinance?

I had past experience sitting on a water utility board where the shortages we were experiencing in our community’s water supply were making approving new connections difficult.  Existing residents who were being cut back on their water allocations were resenting seeing new subdivisions going in that obviously would need additional water supply.  Because of the crisis the board voted a moratorium on new connections, and then all hell broke loose.  And we weren’t the only community to declare a moratorium – there were a number of others in California that were forced to do the same.  There needed to be a better way to reconcile water scarcity with the need for development.

Do you think that a NetBlue approach can help cities pay for water conservation measures? 

Absolutely.  In order for developers to make their projects “water neutral”, they need to “offset” their new water demand by instituting conservation measures in existing buildings, which can either be done by the developers themselves, or by the water utility with the offset funds provided by the developer.  Since the water utility has to certify that the offset actually equals the projected new demand of the development, it makes sense for the conservation measures to be coordinated by the utility.

How is it being received by urban water managers? Do you have a sense for how many communities may have implemented this type of offset approach?

The most recent example of water neutral development policies has been adopted by the City of Bozeman, Montana because their growth pressures have been exceeding the local water supply availability.  AWE’s research shows that before Net Blue at least 13 communities had adopted these programs, and some have existed for decades.  The town of Cambria, California developed an offset program in the mid-1990’s because of their acute water supply shortage along the central coast, and the offset program has been running ever since.  Even a single family house permit needs an offset in Cambria.  A number of California water suppliers are currently considering adopting water neutrality policies for their new connections because of the megadrought that is plaguing the West right now.  Doing water neutrality through a new connection policy is certainly one way to handle it, which avoids the need for adopting a municipal land use ordinance for Net Blue  in each community that a water supplier serves.

What do you say to developers that complain about having to pay for offsite water conservation?

Yes, it is a cost.  But it is a cost that enables the developer to actually construct projects in water short areas.  Without such a program, communities and water suppliers have to institute temporary or even permanent moratorium measures.   During the Net Blue development phase, we consulted with a nationally known Land Use Attorney (Dwight Merriam) who has represented a number of developers over his career.  His opinion was that developers need certainty about what is required to get a project approved.  With a Net Blue ordinance that makes clear from the outset what the options are and what those options cost, a developer can examine the methodology and determine the cost even before the property is purchased.  That kind of certainty is worth a lot of money to a developer.

Do you have any sense for how much of a financial burden this approach puts on development, such as increased cost per house? 

The Net Blue program is not just for residential housing, it can also apply to office buildings and other commercial construction.  On the AWE website you can find some examples that we calculated to show how small an offset actually needs to be.   Every development’s offset will be different depending upon the local micro-climate and the water offset ratio required (1:1 or 2:1).  Let’s take an example where the amount of offset needed for a multi-unit office building is 4.35 Acre Feet/Year.  To get that much water savings in offsets might seem difficult, but the actual offsets are not that expensive. Just 60 toilet retrofits will provide 54% of the needed offset savings in this example, not a particularly expensive measure.  The developer can choose among a variety of different retrofit possibilities to meet the 4.35 AF target, but a developer could also choose to achieve it all with toilet retrofits, which won’t cost that much.  On the AWE is another example with five single family homes that shows that the offset can be achieved with only 55 high efficiency single-family toilet replacements (e.g. WaterSense labeled toilets).  These toilets are less than $200 apiece, probably $300 including the plumber to install it.  So in this example the cost of offsets is $16, 500 for five houses.  Yes, some measures are more expensive than toilets.  But the simple retrofit options are cheap – and they will be readily available in areas with a lot of older housing stock.  Where an offset can get expensive is when those easy retrofits are no longer available.  That’s the situation that Cambria is in now, but for most other communities it will take many years to get that saturated.

Do you think such an ordinance helps to educate developers about ways to build homes and businesses with lower water needs?

The first step is getting the developer to make the new projected potable water use to be as low as possible so as to reduce the need for a massive offset.  This means that the developer can be creative and install graywater systems and rainwater harvesting measures to make the development more efficient to start with.  What we see in communities like Cambria that have been doing offsets for years is that the offset opportunities get more and more limited as retrofits occur and there aren’t many high water using plumbing fixtures and appliances left to replace in a conservation program.  Thus designing the development to be smart from the start reduces the size of the offset that might be hard to find later.

A Net Blue approach pushes developers to build new homes or businesses that use the least-possible amount of water. Do you think that having a ‘water efficient home’ is an attraction to homebuyers?

As water rates begin to climb, water efficient homes will be in the same kind of high demand that energy-efficient and solar powered homes are now. WaterSense labels new water efficient homes.  My community of Lake Arrowhead charges $16/cubic foot for large water users.  That’s expensive water:  $16 for 748 gallons.  As a result, we are seeing many landscape redesigns to make properties more efficient and reduce the outdoor water use bill.   New houses here don’t offer lawns anymore.