Benefits of Water Meters

Water is a valuable commodity; with global warming it appears to be even more scarce. A report suggested that British rivers could see an 80% decline in water volumes during the summer months because of global warming and increased demand.

With most scarce commodities like electricity and gas, you have to pay depending on how much you use. There would be no sense in providing electric sockets and then allowing people to consume as much as they like.

People have the assumption that water is free because it comes from the sky. But, clean drinking water has costs – costs of collecting, costs of filtering and costs of delivery. Furthermore, the last units of water have a higher marginal cost. To supply an extra 10% of water we need to build a new reservoir which is more expensive than easier sources of water.

However, the last units of water have a declining marginal utility. The first 10 litres of water we use per day have a high marginal utility – the water we drink. The next 50 litres have a reasonably high utility –  the water we need for washing. But, the next 50 litres would be of doubtful utility. This is the water we used for hosing the car, using a sprinkler in the garden or the water we use unnecessarily.

At the moment, water consumption is free so we consume up to a point where marginal utility is 0. But, the marginal cost of this water is much higher. This is allocatively inefficient.

If people were made to pay for the water they consume, they would think carefully about leaving taps on, they would have an incentive to fix dripping taps, they would wash a car with bucket rather than hosepipe.

If people really wanted to use water for sprinkling on the garden they could – if they are willing to pay for it.

Water Meters would have many advantages:

  1. Encourage water conservation – important given strain on water resources
  2. Encourage allocatively efficient distribution. People would consume to where the marginal cost = marginal utility
  3. In long term lower overall water consumption would reduce cost of investing in unnecessary reservoirs, leading to even lower water bills.

I would recommend a form of price discrimination which makes consumption of water progressively expensive. i.e basic units would be cheap. But, to have more than a ‘normal amount’ e.g. for use to water the garden would be expensive.

With global warming excess water consumption is likely to have negative externalities e.g. loss of water from rivers deplete fish stocks e.t.c. – If this is the case we will need high prices on water to reflect the social cost.

The water companies should also be able to increase prices whenever there is a water shortage (and lower them when we have a very wet summer and water levels are high).

People will say it is not fair big families will have higher costs. But, it’s like saying it’s not fair big families have to spend more on food because there’s more people.

I really can’t think of any arguments against water meters. Just like I can’t think of any arguments to say electricity and gas should have a fixed price for unlimited use.

By on March 31st, 2009

One thought on “Benefits of Water Meters

  1. That sounds a capitalist view. I don’t look as water to be looked the same as energy by charging per unit (even though water could used as energy) and gas as it is recycled. You seem to be using all the same arguments I see everyday about water meters by comparing it to gas and electricity which I mentioned below in pricing. And I see my arguments, below, appearing elsewhere too.

    Families will pay for the costs, and those who can afford to waste it or pay fines will waste it, just like companies who find it cheaper to pay the fine to dump their waste in rivers if they’re caught, than pay for it to be properly disposed, so that’s my argument as to why it is unfair. I disagree in paying per what you use as if it costs that amount in gold and seeing it as money in excuse for the environment, because it is an artifical value imposed on a water unit, just like profits and huge bill after the privatization. Pricing is definitately an issue unlike what I read on Europe.

    When I hear that a water meter will save money, then they turn around say that they will over charge for water and now that sounds misleading.

    Have you read watermeterscam.co.uk ?

    I predicted something like this will happen many years ago. He is moaning like as for expensively shopping but they were dishonest in their practice and that is another reason why I find it unfair in the way they were going about it.

    I think one fairest way to be brutally honest about consumption is ration the supply which might be unfair for those who need more where they could make exceptions for disabled people. Nationalizing the water back was an idea of mine because of less profits on the bill. Isn’t right that customers look for value? But they seem to be slammed on looking at value for the environment, which seems like one big excuse to me even though our bills go up as a result of (rainwater and population growth).

    The pricing I predict as possible, the less people use water, the more they will charge for unit in the need to make a profit, I notice this with electricity pricing compared to residential and business tariffs but that will be dishonest if they did that for water. I know drinks companies have their own private wells to bring the cost down.

    I did my bit to cut down soon they will demand that I prove it with a meter, then they will probably raise the price of water and not do anything about the supplies.

    Just my view on things. I don’t mind paying for others with the large bills I receive for flat rate. Sad people can have the attitude to abuse it. I know some couples who pay very little for water on a meter and some who pay nearly a thousand pound excluding children due to the area they live in. I am going to ask them for their bill as I am curious.

    I remembered when they’re on working on desalination until Ken Livingstone stopped it. I am going see if their are any other projects.

    I hope I didn’t offend by my view points. I would like to hear what you think.

    RSkeats

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