Drought, Dependency, and Development
The City of Phoenix has been extensively studied in the world of water management as a result of its unique and precarious hydrological situation. Located in a hot and arid climate, Phoenix faces threats of extreme drought conditions, which have plagued the southwestern United States for the past two decades. The city’s climate issues are exacerbated both by Phoenix’s shared dependency on the Colorado River as a freshwater resource, from which several other municipalities over seven states also draw their water, as well as the city’s fast-paced growth in recent years.
| 200,000 new residents since 2010
| 4% statewide GDP growth in 2018
| 2.5% statewide job growth in 2019
Growth in particular poses a significant challenge to the City of Phoenix. Despite per capita water use having decreased as a result of conservancy measures put in place over the course of the twentieth century, overall use continues to increase as population and industry grow.1 This increased demand, coupled with Phoenix’s reduced supply as a result of decreasing Colorado River flow and drought will lead to untenable circumstances without a drastic revision of current water management practices.
The Colorado, Salt, and Verde rivers serve as the metropolitan area’s primary surface water resources, and the remainder is pumped from carefully managed groundwater reserves.2 In 1980, the Arizona Groundwater Code came into effect, establishing five Active Management Areas (AMAs) which the Arizona Department of Water Resources oversees to control over drafting of groundwater resources. The Phoenix AMA, which covers the city and surrounding areas in Maricopa County, has long set 2025 as its deadline for achieving safe yield by continuously reducing water consumption and groundwater dependency while recharging the AMA basin.3 In order to reach this goal, Phoenix has depended heavily on excess water allocations from the Colorado River as well as treated wastewater to recharge its aquifer. This system is a form of Indirect Potable Reuse (IDPR)—whereby the aquifer acts as an environmental buffer before that same wastewater, diluted by banked CAP allocations, is pumped back out to be used as drinking water once more.4
Although the Phoenix Water Department has maintained its commitment to reaching safe yield by 2025, critics have long pointed to the lack of regulation in certain areas of the AMA, as well as unregulated growth and development, as clear indications that this goal will not be met.5 Furthermore, the Arizona Water Banking Authority has announced that as a result of the Drought Contingency Plan signed into effect in 2019, there will be no excess CAP allocations, or Colorado River water, available for banking. 6 These conditions are likely to continue as allocations are set to decrease due to reduced flow and upstream drought. As a result, Phoenix must once again find a way to diversify its water supply towards more sustainable sources.
This project proposes the utilization of a Direct Potable Reuse (DPR) system through the installation of a new Advanced Water Treatment Facility (AWTF) with a direct-to-distribution approach. Implementing such a system was recently made possible through state-wide legislation passed in 2018, which allows for direct potable reuse of treated wastewater and permits AWTFs in the state.7 Based on a pilot DPR project launched in El Paso, Texas, Phoenix could produce as much as 12 million gallons of drinking water a day through the installation of an AWTF with direct-to-distribution. 8 This new water source would be drought-proof, as it does not depend on upstream freshwater sources and, relative to facility capacity, supply would increase in tandem with demand, easing the burden of accommodating Phoenix’s quickly growing population.
What is an AWTF and How Can They Help?
AWTFs or Advanced Water Purification Facilities, as they are also known, recycle sewage water through a variety of processes that bring the water to well above drinking water standards. These processes include: membrane technology; reverse osmosis; ultraviolet disinfection with advanced oxidation; and granular activated carbon filtration.9 In tandem, these steps purify water and result in higher quality and purity levels than water pumped from aquifers or drawn from freshwater sources. Instead of mixing the highly treated water that comes out of the AWTF with groundwater or other raw sources, the water in direct-to-distribution or pipe-to-pipe systems can go directly back into the drinking water distribution system. 10
El Paso, Texas boasts the country’s only project for a comprehensive AWTF with a direct-to-distribution approach. The desert city has a similar climate to Phoenix and faces many of the same challenges relative to drought-induced water scarcity and diminishing groundwater sources. Based on El Paso’s current water use and population, El Paso Water estimates that the water treatment facility could supply 6% of the city’s water by 2030 and estimates that cost for instituting the direct-to-distribution system could range from $110 to $150 million.11
| 12 MGD water added into water supply
Given per capita use of 108 gallons of water a day and a population of 1.6 million residents, 12 million gallons per day (MGD) from a single facility could provide a comparable dent in Phoenix’s residential water use, and much more if the DPR system were distributed over several facilities. 12 According to reports by the Australian Academy of Technological Services and Engineering (ATSE), DPR systems have reduced maintenance costs as compared to IDPR and also reduce the potential for water loss in disparate steps of the distribution process. The pipe-to-pipe system also also allows for the water to be pumped over shorter distances, resulting in a less energy intensive process.13 As the production of energy is itself a significant consumer of water in the Phoenix area, this saved energy would further assist in water conservation efforts.14
Despite the many grants available to fund AWTF facilities and direct reuse projects, adapting its existing system to DPR, as well as funding infrastructure and testing cost will come at significant cost to the city. For this reason, the second part of this proposal focuses on a revised water pricing structure for Phoenix. In addition to creating revenue to fund AWTF facilities, such a pricing structure will have the added benefit of further encouraging reductions on per capita water use in this growing city, which remains higher than the US average.
Phoenix, We Have a Pricing Problem
Despite bold conservation goals, Phoenix provides little financial incentive for consumers to save water. Circle of Blue, a nonprofit affiliate of the Pacific Institute, monitors monthly water costs from 30 cities across the country. Phoenix, despite its desert location, consistently ranks amongst the cities with the lowest average costs.
As seen in the charts below, a family of four using 50 gallons of water per person per day pays just over $12/month. This compares to more than $35 on average across the 30 cities and more than $54 in Santa Fe, which has faced similar drought issues to Phoenix.15
Phoenix’s pricing model fails to adequately value water in a way that effectively encourages consumers to conserve use. The city uses a traditional billing structure that consists of a flat monthly service charge and a volume charge. The flat monthly service charge includes either 4,488 or 7,480 gallons of water/month dependent on the season and the volume charge is an additional cost for usage above the given water allowance. 16
In theory, the volume charge should disincentivize consumers from going above the given thresholds, but one can pay as little as $4.30 per additional 1,000 gallons. What is quite possibly more striking is that a Phoenix resident can pay as little as 62¢ per 1,000 gallons used.17
| 62¢/1,000 gallons
Pricing Water to Manage Growth
Phoenix requires a restructured water pricing system to better prepare for the city’s future water investments and encourage water conservation among consumers. In order to mitigate the inevitable political backlash that will come from these increases, we propose the inclusion of a low-income water assistance program as well as expanded financial incentives for customers to invest in water reduction technologies. These additional financial strategies would complement the price increases by growing the water department’s revenue base without further putting financial strains on lower income families in the region.
An increasing block structure consists of a flat monthly service charge based on meter size and volume charges based on the amount of water a consumer uses in a given month. The volume charge would be tiered based on household size, meaning that the number of household residents determines the amount of water available at a given block price. The example pricing table below illustrates this model and shows the price per 1,000 gallons within each block.
In this new structure, there are three pricing blocks determined by average monthly water costs across other major cities, including desert cities like Tucson and Santa Fe. Each block provides the amount of water available at the given price, which is dependent on household size. Thus, a household size of 1 will pay $4.50/1,000 gallons up to 1,750 gallons, while a household of 4 will pay that same block price up to 7,000 gallons.
Blocks 2 and 3 are pricing multiples of Block 1 and are meant to financially incentivize consumers to conserve more water. While these added costs are considerably higher in comparison to Phoenix’s existing pricing structure, cities like Santa Fe, which uses an increasing block model, pose much heavier financial costs on those who go above the initial allowance level. This structural shift will result in a 120% increase from existing average water costs in the city, but Phoenix will still maintain prices, on average, 30% lower than other major cities.
This model is meant to correct and build upon existing increasing block models in other cities that do not account for household size. For example, in Santa Fe, residents pay $6.06/1,000 gallons for the first 7,000 gallons.18 The 7,000 gallons total is a basic standard water amount determined by the average need of a family of four. This existing model fails to adequately accommodate families who will use up their blocked allocation at a much faster rate than smaller households. Single or two-person residences are much less inclined to conserve water when they pay the same block price for amounts well above their need.
By including household size, our model equitably prices water as low-income residents are more likely to have more children and should not be penalized for having larger families. This also ensures that smaller households are held to the same conservation standards as larger residences.
Ensuring Equitable Water Access
Raising water prices is politically divisive in part because water has been severely underpriced for decades and there is an expectation that prices should remain consistent. Contradictory to this idea is that water utilities are often expected to be financially solvent and continue to invest in water infrastructure, like the proposed AWTF, to meet a growing population’s demands. Our model seeks to resolve this issue without placing undue burden on lower income households.
Incorporated into our pricing model is a low-income water assistance program and a set of financial incentives offered to those who invest in water reduction technologies.
The low-income water assistance program would replicate similar models used by the California Water Service and the City of Tucson to provide service-charge discounts and credits towards monthly charges. The program would ensure that rates for low-income customers remain affordable and comparable to prices today. Residents would be eligible for the program based on their household incomes.
As Phoenix does not currently offer any financial incentives or rebates for consumers to invest in water reduction technologies, our program would be complementary to the proposed pricing model. First, expanded financial incentives program would relieve some of the political backlash that will inevitably result from the increased water prices. Secondly, this program expands opportunities for consumers at the household level to further conserve water through individual investments. This will alleviate some of the financial burden faced by the Phoenix Water Services Department (PWSD) to make major infrastructural investments in the future.
This plan recommends that financial incentives and rebates be provided for the following water reduction technologies:
- Water-efficient landscaping
- Gray water irrigation systems
- Smart irrigation controllers
- High efficiency toilets and appliances
- Rain barrels
Similar to the water assistance program, the financial incentives and rebates must be offered to low-income residents. To do this, PWSD can offer grants and loans for low-income customers to invest in the listed water reduction technologies. This has proven to be effective in cities like Tucson, which offers a combination of grants, loans, and free toilet replacement for inefficient toilets. It is crucial that Phoenix institute its redesigned pricing model equitably and the low-income water assistance program, in tandem with the expanded financial incentives, will allow the city to promote conservation without placing undue financial strain on its most vulnerable residents.
A Continued Reputation of Innovation
From aquifer recharge to wetlands for water filtration, the PWSD has long been at the cutting edge of water treatment and management. However, with imminent drought and the inevitable effects of climate change it is time for Phoenix to look to new technological innovations — coupled with a redefined financing model. AWTFs and direct-to-distribution can work to reduce Phoenix’s current dependency on freshwater sources with uncertain futures. This diversification of supply would enable PWSD to ensure it is able to provide water for its quickly growing population, while new pricing structures will ensure that consumers are accountable for the true price of supplying this precious resource to the desert city.
[1] Hirt, Paul, et al. “Water Consumption and Sustainability in Arizona: A Tale of Two Desert Cities.” Journal of the Southwest, vol. 59 no. 1, 2017, p. 264-301. Project MUSE, doi:10.1353/jsw.2017.0017.
[2] “Water Resources” Phoenix Water Services Department https://www.phoenix.gov/waterservices/resourcesconservation/yourwater/water-resources-information
[3] “Assured Water Supply” Phoenix Water Services Department https://www.phoenix.gov/waterservices/resourcesconservation/yourwater/water-resources-information/assured-water
[4] “Potable Reuse and Drinking Water” EPA https://www.epa.gov/ground-water-and-drinking-water/potable-water-reuse-and-drinking-water
[5] Hirt, Paul, et al. “Water Consumption and Sustainability in Arizona: A Tale of Two Desert Cities.” Journal of the Southwest, vol. 59 no. 1, 2017, p. 264-301. Project MUSE, doi:10.1353/jsw.2017.0017.
[6] “Colorado River Basin Drought Contingency Plans” Bureau of Reclamation https://www.usbr.gov/dcp/
[7] “Recycled Water Rulemaking” Arizona Department of Environmental Quality. 2018 https://azdeq.gov/recycled-water-rulemaking
[8] Carollo. “Advanced Water Purification Facilities” https://www.carollo.com/projects/el-paso-advanced-water-purifica
[9] ibid.
[10] Martin, Laura. “Direct Potable Reuse Vs. Indirect: Weighing the Pros and Cons” Water Online. https://www.wateronline.com/doc/direct-potable-reuse-vs-indirect-weighing-the-pros-and-cons-0001
[11] ibid.
[12] “Historical Population & Water Use” Phoenix Water Services Department https://www.phoenix.gov/waterservices/resourcesconservation/yourwater/historicaluse
[13] Martin, Laura. “Direct Potable Reuse Vs. Indirect: Weighing the Pros and Cons” Water Online.
[14] Pasqualetti, M. & Kelley S. “The Water Cost of Elecity in Arizona” Arizona Water Institute. https://www.circleofblue.org/wp-content/uploads/2010/08/AZ-Solar-Water-Fact-Sheet.pdf
[15] “Water Rates Dashboard” Circle of Blue. https://www.circleofblue.org/waterpricing/
[16] “Water and Sewer Rates and Charges” City of Phoenix. https://www.phoenix.gov/waterservices/customerservices/rateinfo
[17] ibid.
[18] “Water Rates” City of Santa Fe. https://www.santafenm.gov/water_rates
