Keeping Economic Development Flowing Through Water Conservation
Speaking at the Central Texas Water Efficiency Network Symposium in February, Amy Madison (Executive Director of the Pflugerville Community Development Corporation) signaled that water conservation and economic development departments are partners in community vitality. Ms. Madison argued that, after available property and a trained workforce, resource availability - especially reliable energy and water - is critical to attracting new employers and local amenities.
I selected the Hawaiian Falls Waterpark as my case study for this article to draw attention to this topic. While this was a controversial project for Pflugerville - given the Texas drought - the City did its homework, securing water conservation commitments from the developer and understanding that total water use would be than new housing developments. Pflugerville is an example of a community that is connecting the dots between economic development and water resources, and is recognizing the benefits of visible water conservation efforts.
Active municipal water conservation programs can be an effective economic development strategy for many communities. The value proposition for cities to proactively offer business water conservation programs is a strong one:
Stay economically attractive. Anecdotally, municipalities are reviewing and sometimes turning away potential employers due to potential impacts on available water supplies. Running effective conservation programs helps to "make room" for new employers, and quantifying long-term conservation savings promotes strategic planning and economic development efforts.
Lower the cost of service as you explore new supply sources. Analysis by AIQUEOUS shows that water conservation can cost less than 50% of the cost of proposed water supply projects. One argument to expand supply is to drive additional consumption (and revenue) to keep prices low. However, less cost-effective options drive increases in total spending. And, inflation or cost overruns in water supply projects can lead to increasing rates anyway.
Help your current and potential business customers manage their long-term price volatility risk. Water conservation measures can easily be cashflow positive if financed by new construction loans or other financing vehicles. This improves business financial performance and lowers their long-term operating costs. The City of Phoenix, with support from Alan Plummer Associates, just published a review of their commercial, institutional, and industrial water use trends in Journal AWWA (March 2016). While falling water use in the sector creates revenue challenges, it also creates space for additional economic development. Proactively helping businesses manage their water use (through strategies as those listed below) makes them less susceptible to price increases, and helps utilities project revenue impacts.
Source: Frost, et. al. "Seven Lessons Learned Studying Phoenix Commercial, Industrial, and Institutional Water Use." Journal AWWA (March 2016, 108:3)
Boost local spending on contractor services and home improvement products. In 2010, Angelou Economics found that Texas' energy efficiency programs were generating over $500 million in annual economic activity and were supporting nearly 12,000 jobs each year. Similarly, water conservation dollars circulate within local economies, keeping local businesses inbusiness.
Generate a "reservoir of goodwill" among customers, improving the chances of receiving public support for rate increases. Research by AIQUEOUS into the potential public relations benefits of water conservation shows that these programs both establish effective relationships between a water utility and a community, and provide tools to help customers manage the impacts of rate increases.
Water utilities should reach out to their economic development counterparts to forge strategic partnerships and alliances. Economic development offices have access to funds that can supplement "pay-as-you-go" approaches to water conservation for business customers. We suggest that you start these conversations today.
For copies of AIQUEOUS research into these areas - and to receive our monthly newsletter - please send an e-mail to email@example.com.