California’s Water Affordability Challenges: Thousands Could Go Uncounted

New Study Shows Type of Measurement is Critical to Recognizing California’s Water Affordability Challenges

August 14, 2013, Oakland, CA: A new pilot study in California addresses the question, “Where are water bills unaffordable?” – and finds that many households, even within affluent communities, routinely spend over the affordability threshold of 2 percent of their household income on their water bill. The number of water systems with “unaffordable” rates varies by region and measure used – which has important implications for policy makers.

Assessing Water Affordability: A Pilot Study in Two Regions of California, from the Pacific Institute in partnership with Community Water Center and Fresno State University, looks at both an urban and rural case: the Sacramento metropolitan area and the Tulare Lake Basin. In Sacramento, using the most common form of determining affordability – the annual water bill as a percent of median household income at the water system scale – few water systems appeared to suffer from unaffordable rates. In contrast, in the Tulare Lake Basin, 18% of systems had unaffordable rates. Using a more fine-grained measure based on household income levels reveals even higher levels of unaffordability in both regions.

In the Sacramento metropolitan region, measuring on a water-system-wide scale vs. a household scale means the difference between recognizing zero water systems with unaffordable rates vs. 100,000 households with unaffordable water rates. In the rural Tulare Lake Basin, measuring on these different scales means finding only nine out of 51 water systems with unaffordable rates vs. nearly 4000 households with unaffordable water rates – some 40% of the households in the study group.

“Water rate affordability is a central element to water access, and cost makes water excludable and inaccessible to those who cannot afford it,” said Dr. Juliet Christian-Smith of the Pacific Institute. “Water affordability is also a major concern to public welfare, safety, and security. When households are unable to make their water payments, consequences can include public health crises, social unrest, and lost revenue for water providers that can threaten their fiscal stability.”

“In the Central Valley, unaffordable water rates in small disadvantaged communities with low-income households create significant economic burdens for families. But water systems themselves face further constraints,” said Dr. Carolina Balazs, post-doctoral fellow at the University of California Davis and research scientist with the Community Water Center. “As the persistent water quality problems in the Valley worsen, water treatment costs will increase, and systems may be forced to increase their water rates, leading to likely scenarios of increasing water bills in an area already plagued with high levels of unaffordability. Indeed, more and more water systems may find themselves in a difficult financial situation, torn between the need to upgrade or increase treatment to ensure safe drinking water while also keeping water bills low enough for customers to have access to affordable water.”

The study’s results show that a significant number of areas within water systems have unaffordable rates, even if the system as a whole does not, and so it may be more important to consider household income rather than median income when assessing and addressing water affordability.

“These results are important for policy makers. Very few studies have looked into issues of water affordability, which is really critical in California,” explained Omar Carrillo, policy analyst of the Community Water Center. “There is currently a mandate to assess affordability across the state, and this study is showing that what measures you use can make a pronounced difference in how many communities or households get counted – so their situations can be addressed.”

Water provision is a rising cost industry in both urban and rural areas, with much of the water infrastructure in the U.S. at, or beyond, its useful life. Infrastructure replacement costs will significantly contribute to the unaffordability unless these costs are paid for in great part by external funds. In addition, some water systems, such as many in the Tulare Lake Basin, are facing challenges as legacy nitrate pollution or other contaminants like arsenic and DBCP continue to contaminate water supplies. In these areas, households must spend an even greater percent of their income purchasing replacement water, making affordability an even greater issue.

The study indicates that more specific discussion of developing affordability programs, whether within or across systems, will be critical for California, and more work is needed to address financing considerations for water systems, and their technical, managerial, and financial capacity.

The report Assessing Water Affordability: A Pilot Study in Two Regions of California may be downloaded free of charge from the Pacific Institute website at: www.pacinst.org/publication/assessing-water-affordability

The Pacific Institute is a nonpartisan research institute that works to create a healthier planet and sustainable communities through interdisciplinary research and partnering with stakeholders for solutions that advance environmental protection, economic development, and social equity.  www.pacinst.org

Community Water Center (CWC) is an environmental justice nonprofit organization whose mission is to create community-driven water solutions through organizing, education, and advocacy in California’s San Joaquin Valley.  www.communitywatercenter.org

The California Water Institute (CWI) at Fresno State
serves as a center for research, education, planning, policy evaluation, and information transfer in an effort to promote practices that will enhance and preserve California’s water resources and their quality. www.californiawater.org