Valuing water demand management

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Proponents of taking a water demand management approach - also known as a water efficiency approach - argue that it will produce environmental social, cultural and economic benefits. 

Beacon commissioned the development of an economic framework to value the net benefits arising from the implementation of water demand management.  The framework attempted  to value all potential benefits and costs of implementing water demand management in monetary terms.  These included:

  • savings in operational (including electricity) and capital costs required for water supply and wastewater treatment
  • loss in benefits received by consumers from water consumption
  • increased provision of indirect use values through the reduction of water taken from ecosystems
  • reduced emissions of greenhouse gases.

Testing the framework

It was tested by appication to Tauranga City Council to value their water demand management strategies of water metering and pricing, and education programmes.  The framework provided clear evidence for the hypothesis that the introduction of water demand management interventions will generate significant benefits for councils. The case study result shows that in implementing a water demand management approach, Tauranga City Council (TCC) has delayed the implementation of the next major water supply infrastructure identified for the city’s water supply, by approximately 10 years with a net benefit to the community of $53.3 million in 2009 terms.

A decision making tool

The framework is a potential decision making tool for councils to help analyse the value of taking a demand management approach.

As councils face increased pressure to reduce costs and better manage natural resources, this evaluative framework offers councils a robust means to assess their best approaches for better water management.     The evidence from the analysis should provide a powerful value proposition to rate payers and other stakeholders for proposed policy changes to adopt water demand management approaches

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