Bringing Water Consumption Down as the Drought Heats Up

Incentive programs to replace lawns with drought-tolerant landscaping are one of many tools local water suppliers are using to reduce the demand for water. Photo courtesy East Bay Municipal Utility District

As California grapples with one of its worst droughts in recorded history, many in the Bay Area are wondering what should be done to ensure that we have sufficient water. In our 2013 report Future-Proof Water, SPUR analyzed the current and projected water requirements of the Bay Area and assessed methods of addressing these needs according to sustainability, reliability and cost-effectiveness. We found that the most environmentally friendly and cost effective measures tend to be those that reduce water demand, rather than those that aim to develop new supplies.

With the 2014 drought persisting, we decided to take a closer look at the leading approaches in the Bay Area that reduce demand by fostering water conservation and efficiency. We investigated the strategies deployed by local water suppliers and had discussions with leading researchers in the field.

Some effective strategies are nearly ubiquitous among not only Bay Area water agencies, but throughout the state and in other semi-arid climates. They have typically been around for many years and have become familiar to most customers in the region. Such strategies include: subsidized home audits; rebates for high efficiency appliances and fixtures; vouchers for irrigation technology; assistance and training for low-water landscaping techniques; educational programming and outreach; lawn-removal incentives and grant money for local water-saving projects. Though water savings are often difficult to attribute to specific methods, a study conducted in the East Bay demonstrated that a combination of high efficiency fixture upgrades in residences resulted in a 36 percent water savings, while Cal Water determined the distribution of free precision spray nozzles to be one of the most cost effective ways to conserve water in its service area (projecting a 30 percent water savings per sprinkler head)

Some Bay Area water suppliers are also running newer, more innovative conservation programs that use pricing strategies and newer technologies to accelerate water savings. In certain cases, other public agencies have become involved to help develop codes and ordinances that promote water efficiency. Some Bay Area agencies have adapted programs from other regions with great success. In other instances, innovations are being pioneered by one or two Bay Area utilities and others have begun to follow suit. Here’s a look at what's working.


Tiered Water Pricing

The price of water can create a strong incentive to conserve, and pricing water consumption through tiers can be one of the most effective ways to reduce demand. In a tiered system, customers pay a certain water rate per unit for an initial amount of water, a slightly higher rate per unit if they exceed the first threshold, and additionally higher rates at higher thresholds depending on the structure of the system. This allows consumers to determine their own water use but provides strong financial incentives to remain within a particular limit. The Estero Municipal Improvement District, supplying Foster City, employs a three-tier pricing structure for residential customers designed to ensure fiscal stability regardless of consumption patterns, while the City of Hayward constructed a four-tier pricing structure that incorporates residential wastewater charges, making it unique among pricing strategies.


Water Budgets

Another approach that uses pricing incentives to reduce water use is water budgeting. This method is similar to tiered water rates in that consumers are given strong financial incentives to use a lower volume of water, with steep costs associated with higher water use. Depending on a variety of factors, such as number of residents within a household, size of yard and type of vegetation, a household’s water budget is calculated and customers pay a basic rate up until their account’s specific water budget; they’re penalized with higher rates if their water use exceeds their budget. Because of water budgets’ complexity, water agencies have introduced them slowly, often starting with the large landscape class first. Both the Estero Municipal Improvement District and the Contra Costa Water District have instituted landscape water budget programs with success. Meanwhile, the East Bay Municipal Utilities District (EBMUD) is piloting a water budget program for single-family residences, one of the first in the nation to do so.



Decoupling is the concept of separating a utility’s sales from its overall profits. Conventionally, water savings could lead to decreased revenue and lowered profits for an investor-owned utility, creating a disincentive to promote conservation. With decoupling, a private utility is reimbursed for net revenue losses if it does not reach its sales forecast, and in turn must pay back excess revenues to its clients if it exceeds its forecast (though it may still make a modest profit for investors). The concept began in the energy sector and migrated to California’s private water utilities in 2008. The California Public Utilities Commission piloted decoupling mechanisms for private suppliers such as the California Water Service Group, which serves parts of the peninsula and other portions of the state, and other private utilities have since followed suit. Decoupling allows investor-owned utilities to join public utilities in pursuing statewide conservation goals (20 percent reduction by 2020) by removing the disincentive, but does not guarantee reduced water use on its own.


Improved Water Meters

As California attempts to reduce statewide water consumption, it acknowledges the old adage: You can’t manage what you don’t measure. State law now mandates that all California cities install water meters by 2025; research has demonstrated that communities without water meters use 39 percent more water than the state average. Many Bay Area water agencies are taking things a step further by switching to smart meters, or advanced metering infrastructure, to provide both the utility and the customer with better data. This real-time information allows utilities to know immediately if there are abnormal usage patterns or spikes in demand, potentially indicating a leak or pipe rupture that can be addressed right away. For one utility, switching to smart meters reduced water loss from 6 percent to 2 percent. The San Francisco Public Utilities Commission (SFPUC) is making extensive use of advanced metering technology and has transitioned nearly all of its previous meters to the new technology.



Meters are essential to measuring water use, but even in places where meters exist, there is often a gap of information between which users consume how much water. This is the case in places like multi-unit buildings, RV parks or commercial complexes where tenants pay a pooled water bill. Submeters track water consumption for each individual tenant or renter, allowing for bills to be paid more equitably and encouraging those using the most to conserve in order to pay less. Water agencies and utilities have begun to subsidize submeter installation, through rebates like those offered by EBMUD and the Santa Clara Valley Water District. In a case study evaluating the effects of submeters on mobile home parks, Santa Clara Valley Water District found the average household used 23 percent less water after the installation of submeters.


Metering Technology

In addition to new and improved meters, cutting-edge technology added to meters is enhancing the ability of utilities and their customers to conserve water. In Palo Alto, a gadget called the Barnacle, made by Aquacue/Badger Meter, allows the utility and customer to get accurate real-time data on water use without having to redo piping or replace the existing meter. Instead, the Barnacle attaches easily to the piping and uses sensors to provide accurate data, helping identify leaks in old structures where installing new meters would be prohibitively expensive. Sonoma County will also be piloting this technology, as well as another piece of hardware called the Unmeasured Flow Reducer, by A.Y. McDonald. This piece tracks smaller leaks that normally do not create enough pressure to be registered by a standard water meter, but nonetheless can result in significant amounts of water loss.


Presenting Consumption Data

In addition to introducing new hardware, some water agencies are exploring software’s capacity to influence demand. EBMUD and the City of Palo Alto Utilities have made use of WaterSmart technology. This software creates a web portal for each customer that emphasizes the utility’s conservation program and makes customized recommendations. In addition, WaterSmart sends personalized water reports that show consumers how they compare to others with similar household types and property sizes, creating a type of peer pressure that has led to 5 percent reductions in water use and an increased likelihood to participate in conservation offerings.


On-Bill Financing

The small Sonoma town of Windsor, a leader in sustainable development in the Bay Area, developed the Pay-As-You-Save (PAYS) on-bill financing program in concert with the Sonoma County Water Agency. Through PAYS, customers pay for home energy and water efficiency upgrades, such as new appliances, fixtures and even landscaping, through a small surcharge on their regular monthly bill, paid back over 10 to 15 years. The surcharge is set to be lower than the amount of savings gained from efficiency improvements, hence “pay as you save.” This program has been particularly popular among multi-family residences, which are often difficult for conservation programs to reach. Noting Windsor’s success, several other utilities in the Bay Area are now developing on-bill financing schemes.


Building Codes

California’s recent passage of an updated building code, known as CalGreen, included stricter requirements in a number of areas for new construction or major renovations, including water use. Cities like Hayward have often elected to target water use in their local building codes. In some instances, these codes call for even greater water efficiency than the state requires. San Francisco’s code, for example calls for a 30 percent reduction beyond the baseline.


Retrofit on Resale

A few cities in the Bay Area went beyond green building codes to follow San Luis Obispo’s lead in instituting retrofit-on-resale ordinances. Such policies require either the buyer or seller of a building to bring any inefficient fixtures and dated plumbing up to present federal plumbing standards, as is the case in San Francisco. San Francisco’s Retrofit-on-Resale ordinance is projected to achieve water savings in 2018 that would not normally be reached until 2030. North Marin Water District took things a step further by requiring retrofits to go beyond federal standards in showerhead and bathroom faucet efficiency.


Irrigation Ordinances

San Francisco and Hayward feature ordinances that go beyond state water standards outside the home, as well. California’s AB 1881 required that municipalities develop their own water efficient landscape ordinances or meet baselines set by the state. Rather than beginning at a 2,500 square foot threshold, San Francisco’s ordinance applies to landscapes as small as 1,000 square feet in its first tier, while Hayward’s Bay-Friendly Landscaping Ordinance requires a minimum of 75 percent drought-tolerant plants in the landscaped area.


Water Saving Recognition

Many utilities can use regulations and restrictive policies to curtail water use, but some include carrots as well as sticks to promote conservation. EBMUD has a WaterSmart Business Certification Program to highlight East Bay businesses that work with the utility to evaluate and manage their water use, following a prescribed certification checklist. Eleven businesses and institutions recognized by the program in 2013 reduced their water use by a combined 25 million gallons in one year. Water conservation is one of the standards in the San Francisco Green Business Program, a certification program recognizing environmental achievements by local businesses.


Demand Offset

Only a dozen communities in the country institute the strict policy of water-demand offsets, but EBMUD has applied this type of tool in a few contexts. In such instances, a developer of a new house or subdivision must offset the projected water use of the development through conservation measures elsewhere. In order to approve one development in Danville, EBMUD required the developer to make a two-to-one offset in addition to onsite conservation measures. Though EBMUD’s policy may sound strict, it’s not nearly as stringent as that of the small town of Cambria, down the California coast, which mandates a 10:1 ratio of water offsets for any new development.

Water conservation is the responsibility of everyone. We hope this overview of some of the most effective, innovative and interesting best practices in the Bay Area can advance the discussion about what our region can do to reduce demand during this record drought.

For more ideas read our report Future-Proof Water >>