Exploring Utility Business Models for Managing Water Demand Reduction
Published: January 21, 2025
The Challenge of Revenue Stability Amidst Demand Reduction
As water efficiency and demand reduction efforts gain momentum, water utilities face a pressing challenge: maintaining revenue stability. Traditionally reliant on volumetric sales, utilities often struggle to cover their substantial fixed costs when water use decreases. This revenue instability can deter investment in water efficiency measures that offer long-term benefits, including cost savings for utilities and customers. Climate change, with its increasingly severe droughts and water scarcity, further compounds these challenges, pushing utilities to rethink their business models.
A Comprehensive Approach to Aligning Objectives
In partnership with The Water Research Foundation, AWE, and Pacific Institute have launched a groundbreaking project to address these issues. This initiative will evaluate new and updated strategies for pricing, rate design, planning, and utility services to align revenue stability with supply reliability, water-use efficiency, and demand reduction. Through expert interviews, surveys, and a robust literature review, the project aims to produce a guidebook featuring actionable recommendations, case studies, and resources for utilities across the United States.
A Collaborative Effort with Expert Insights
A key element of the project is a working group composed of leaders from water utilities, government agencies, NGOs, and other sectors. This diverse team will provide valuable insights and help shape the guidebook's recommendations. The group's collective expertise will ensure the project’s outcomes are both innovative and practical, offering real-world solutions to today’s pressing challenges.
Timely Research for a Growing Problem
This project represents the first comprehensive assessment of the “conservation conundrum” in over a decade. As water utilities face mounting pressures from climate change, overuse of groundwater aquifers, and shifting population dynamics, there’s a critical need for fresh perspectives. By examining strategies from the water and energy sectors, the guidebook will provide utilities with a menu of options tailored to diverse scenarios, from urban growth to rural population decline. As much as possible, recommendations will be broadly applicable to water providers in North America while recognizing local or state policies that may affect options.
Looking Ahead: Sharing Solutions and Driving Change
Once completed, the guidebook will be shared through an extensive outreach effort leveraging the networks of AWE, Pacific Institute, and working group members. This effort will ensure the findings reach key stakeholders, empowering water utilities to implement solutions that balance financial health with environmental stewardship.
Stay tuned as we work together to drive innovation and create a more sustainable future for water utilities and the communities they serve. For more information, visit the project page.