The Cost of Water: Turning the Tide Toward True Water Conservation

While attending client meetings in the Silicon Valley and Las Vegas this week, I experienced first-hand the internecine world of water rights, pricing and water conservation. I began to ask myself who truly has the rights to water, what should water be worth and how can we use our expertise in data analysis, marketing and communications to affect change in water-use behavior? Let’s start with Silicon Valley. A local water utility — that shall remain unnamed — recently received an enormous price increase, which was approved by local and state government entities. Few people paid much attention to this until the new water bills arrived last month. The bills included a whopping price increase of more than $200 per month and new total monthly billing rates of over $700 per month. (If you have the good fortune to live on the “other side of the tracks” served by the other water utility you would pay $200-300 per month. More on that later.) Now to Las Vegas, another parched community clamoring for fresh water. Each year the U.S. Environmental Protection Agency (EPA) hosts a water conservation conference called WaterSmart Innovations. The conference, attended by employees of water utilities, municipalities and other government entities, is focused on reducing fresh water consumption throughout the United States in residential, commercial and agricultural markets. Who are the Thought Leaders Advocating for Change? Among the many topics covered, three presentations immediately grabbed my interest:

• How Behavioral Science Can Help Save Water
• Investigating Media Impact on Water Consumption
• Water Consumption in a Modern Day American Home

Oxford Professor Robert Hahn presents an interesting look at how behavior science and economics can be harnessed to conserving water. As anyone living in water-starved regions knows, there is a plethora of rebates available for water saving products, replacing turf, creating xeriscape gardens, etc. These rebates are almost always funded by municipal governments or water districts. According to Hahn:

• Most rebate programs are not tested before they’re launched
• Rebate funding entities don’t pay enough attention to the information and educational process related to the problem they are trying to solve
• Because of this, behavior change is sub-optimal

A team of PhDs from Stanford University’s Water Center has researched how newspaper coverage impacts water conservation. The team analyzed the number of newspaper articles on drought and water restrictions in the Bay Area beginning in 2014, then used multivariate regression analysis to isolate trends. They concluded:

• News coverage dramatically impacts adoption of water conservation practices in residential markets
• Water conservation behavior in commercial markets is driven mostly by climatic conditions and regulation
• Scarcity pricing does not always create water conservation behavior

The Center for Resource Conservation in Boulder, Colorado presented an interesting take on turf replacement programs. Its “Garden in a Box” program has saved more than 74 million gallons of water and is notable for the following reasons:

• It provides hale and hearty perennials selected for Colorado which are goof-proof for gardeners of all expertise levels
• It contains a variety of themed “plant by number” gardens that have been designed by well-known Colorado landscape design professionals
• It fosters deeper consumer needs and desires than merely saving water that are extremely important to Millennials. These include: building community, educating about sustainability and other environmental issues, and making a difference in everyday life for one’s community.

Now, back to Silicon Valley. As you might expect, my clients and colleagues who shared the water pricing story with me are:

• Trying to effect political change with the utility and various governmental entities that approved the price increase,
• Changing their mental paradigms and behaviors relating to water, and
• Placing a financial value on the American Dream of a green, grassy expanse around their homes

Many of their friends and neighbors are upset about the pricing. Nearly all mentioned news coverage about water conservation AND investigations into the water utility’s pricing policy. Some have opted to stop watering their grass. Others have chosen to collect the turf removal bounty of $1 per square foot and had xeriscaped front yards with gravel or mulch and native species. What Can be Done? So what about the others? NPR reported that water usage in the state of California for the months of August and September 2016 has increased rather than decline. Although scarcity pricing can be a powerful motivator in Silicon Valley, I suspect that the water utilities and public entities trying to reduce water consumption could benefit from the following:

• A behavioral science model that looks more deeply at water conservation behavior for both residential and commercial markets. The model needs to include big data, econometric analysis of climatic conditions, incomes and pricing, market analytics and Voice of Customer.
• A detailed psychographic and behavioral segmentation model for residential and commercial customers who aren’t terribly interested in saving water. The model needs to identify and prioritize behavior drivers and barriers to success.
• A testing cell method that quantitatively spotlights the winning programs, the most effective calls to action, the best performing rebate structures, the optimal program education points, etc.
• An effective PR and social media program that increases earned media coverage and maximizes water conservation behavior. Part of this program should also involve education plans that frame water conservation benefits for both residential and commercial customers.

For more information, contact Mike Reiber at mreiber@axiomcom.com.