Centerpiece
Improved Valuations of Water-Efficiency Programs Can Help Water Managers Make the Most of Them
Just 7 of the 21 efficiency programs included in the ten-year conservation plan of Denver Water, a public utility for the Denver region, appear cost-effective when accounting for only the short-run avoided costs of reduced water demand. However, 16 of the 21 programs appear cost-effective when accounting for the long-run avoided costs and the environmental benefits as well. RAND researchers divided the present value of each program’s 43-year operating cost by its average savings in million gallons of water per year to determine each program’s average cost of saving a million gallons of water once a year across all 43 years (see the table). The average cost of each program was then compared to the median present value of total efficiency benefits (shown in the two figures below at left). Water savings from programs that conserve mostly during the summer, when water is scarcer and demand is greatest, are worth more than are the water savings from programs that conserve more uniformly throughout the year. 
Costs
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| Denver Water Efficiency Programs |
Costs ÷ |
Savings = |
Average Costs |
| Programs That Save Water Uniformly Throughout the Year |
| Low-flow urinals |
$119,000 |
98 |
$1,200 |
| Conservation education |
$7,036,000 |
963 |
$7,300 |
| Low-flow toilets |
$389,000 |
41 |
$9,500 |
| Car-wash certifications |
$164,000 |
15 |
$11,000 |
| Conservation kiosks |
$1,848,000 |
85 |
$21,800 |
| Plumbing retrofits at time of sale |
$75,551,000 |
2,278 |
$33,200 |
| Multifamily residential audits |
$750,000 |
22 |
$33,400 |
| Efficiency ratings |
$42,421,000 |
1,236 |
$34,300 |
| Toilet rebates |
$6,604,000 |
134 |
$49,500 |
| Corporate and industrial incentives |
$117,397,000 |
1,515 |
$77,500 |
| Clothing-washer rebates |
$37,844,000 |
438 |
$86,400 |
| Public housing retrofits |
$5,446,000 |
51 |
$105,800 |
| Programs That Save Water Primarily During Summer Months |
| Cooling towers |
$1,344,000 |
524 |
$2,600 |
| Evapotranspiration controllers |
$626,000 |
234 |
$2,700 |
| Irrigation education |
$5,748,000 |
474 |
$12,100 |
| Irrigation meters |
$3,337,000 |
205 |
$16,300 |
| Rainfall-sensor rebates |
$1,174,000 |
54 |
$21,700 |
| Landscape conversion |
$34,738,000 |
563 |
$61,700 |
| Irrigation checkups |
$55,081,000 |
619 |
$89,000 |
| Irrigation-efficiency incentives |
$167,817,000 |
675 |
$248,500 |
| Xeriscape (drought-resistant landscape) |
$16,642,000 |
21 |
$811,000 |
NOTES: Blue cells indicate programs that are cost-effective when counting all avoided costs and environmental benefits. All numbers are rounded. “Costs” show the present values of Denver Water’s projected ten-year costs extended to 2050. “Savings” are in million gallons of water per year in an average year. “Average costs” are for saving 1 million gallons of water per year for 43 years (from 2007 to 2050).
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Benefits |
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Costs Versus Benefits |
| The median present value of Denver Water efficiency programs that save water uniformly throughout the year is $63,400 per million gallons of water saved every year for each of 43 years. |
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Of the 12 efficiency programs that save water uniformly throughout the year, 9 are cost-effective when accounting for the median present value of all efficiency benefits (all avoided costs plus all environmental benefits). |
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NOTE: The median values above are not perfectly additive, because there is not a one-to-one correspondence among the factors influencing the calculations of the four types of efficiency benefits. |
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NOTE: The vertical bars show the average cost of each efficiency program (from table). |
View enlarged version of the above figure. |
| The median present value of Denver Water efficiency programs that save water primarily during summer is 76 percent higher than the comparable value for year-round efficiency programs. |
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Of the 9 efficiency programs that save water primarily during summer, 7 are cost-effective when accounting for the median present value of all efficiency benefits (all avoided costs plus all environmental benefits). |
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NOTE: Each stack illustrates one combination of representative benefits across 1,000 scenarios. |
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NOTE: The vertical bars show the average cost of each efficiency program (from table). |
View enlarged version of the above figure. |
SOURCE: Estimating the Value of Water-Use Efficiency in the Intermountain West, David G. Groves, James Griffin, Sara Hajiamiri, RAND/TR-504-HF, 2008, 88 pp., ISBN 978-0-8330-4397-9.
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