The sharp rise in world population and income during the past five decades has stimulated greatly increased demand for clean water, and concern about whether the supply of water would be adequate to meet these needs. Demand for usable water in the future will surely continue to grow at a significant pace unless steps are taken to reduce demand, while the supply of water could grow more slowly, especially if global warming reduced rainfall and increased evaporation of water. The best way to bring demand into balance with supply is to introduce much more sensible pricing of water consumption than is common in most countries.
Many discussions of water conservation create the impression that households are large and inefficient users of clean water for drinking, eating, bathing, and toilet flushing. That is a myth. About 40 per cent of all the freshwater use in the United States is for irrigating land for agriculture, another 40 percent is used to produce power, and only 8 percent is used for domestic use; these percentages are similar in other countries. Moreover, about a third of all the water used by households in rich countries goes to water lawns and for other out door purposes, so probably no more than about 5 per cent of the total demand for water is for personal use.
Water used is usually a poor measure of the net amount of water consumed since much water is returned either immediately, or after evaporation and condensation, to the source pool, where it can be used again. Thermoelectric plants use a lot of water for cooling purposes, but typically have a very high reutilization rate (about 98 percent). Household use is also efficient, with a reutilization rate of about 75 percent. As a result, neither power producers nor households are big net consumers of water. Irrigation of farmland absorbs much water since most irrigation systems have low reutilization rates. In California, the biggest water using state, irrigation systems have a reutilization rate of only about 40 percent.
Governments usually try to close the gap between the supply and demand of usable water by command and control policies that regulate water use, usually starting with households. Many local governments have introduced requirements for low flow toilet flushes, bans on lawn watering except during certain hours or days, requirements for more efficient household outdoor watering systems, and other water conserving regulations. None of these regulations do anything to economize on the water used by farmers and industry, the main demanders of water.
Water is wasted in many ways by all sectors, and regulations do nothing to affect the main source of wasteful use of water: the inefficient pricing of water. Most irrigation systems in the world price water through annual flat fees, and not through charges that rise with the water consumed. Often domestic water use is not priced at all, and when priced, flat fees are far more common than fees that depend on use. As with any other scarce good, water is wasted when the cost of using more is negligible.
The obvious solution is to implement fees that rise with the amount of water demanded. Such fees are especially important in the agricultural sector since farming is a heavy consumer of water. Consumption ideally would be defined as net use after reutilization is accounted for. With this measure, the fee per gallon of water used would be low to power plants since they recover almost all the water they use. Farmers would tend to pay a lot both because they typically use much water, and also because most agriculture irrigation systems do a poor job of recovering the water used.
Fees that rise with consumption would reduce the demand for water partly by cutting demand. For example, households would water their lawns less frequently, and sometimes would replace natural grass with artificial grass, or with rock gardens and trees, Farmers would cut their demand for water by switching away from crops that require much water, such as rice, toward crops that need less, such as wheat. They would also switch to more efficient irrigation systems, such as spraying and dripping rather than flooding (which is the cheapest), if the price of water took account of reutilization rates. With proper water pricing, California and other regions that need expensive irrigation system to grow rice and other water-intensive crops would switch to other crops, or to other uses of their land, so that water-intensive crops would become more concentrated in areas with abundant water supplies. More generally, with sensible water pricing in different countries, arid parts of the world would not grow food that absorbs much water, and would shift to other crops and activities that they would exchange for these foods.
Some opponents of effective metering of water demand claim that it would not reduce the use of water because of the mistaken belief that most of the water used goes to households for drinking and personal hygiene. The demand for water for personal use may not be very responsive to price, but households in developed countries use lots of water for lawns and swimming pools that would be sensitive to the price of water. Also public and private golf courses and some other recreational facilities require much water, and these uses too would respond to higher water costs. Clearly, the use of water in agriculture and industry would be sensitive to its price.
Effective water pricing is even more important to poor countries since they cannot afford expensive methods of increasing the supply of usable water, such as desalinization, and since a large fraction of their water is used in agriculture with inefficient irrigation systems. Yet most poor countries make little effort to price water sensibly.
Implementation of significant fees is not easy politically since households and farmers believe they have a right to as much water as they can get. In particular, farmers in richer countries are well organized politically, and often resist efforts to raise the cost of water they use to irrigate their land. Perhaps their opposition could be weakened if they received generous reductions in their water fees when they introduce irrigation systems with high reutilization rates.