The Water and Energy Nexus

Considerations of water pricing are complicated because of the multitude of factors that must be taken into account. These include availability and dependability of water supply locally, state of the distribution infrastructure, and distribution and size of the user base. Dependability is related to climate impacts, such as prolonged droughts that deplete water reserves. A recent study (http://www.watergynexus.com/2014/02/28/de-risking-water-supply-through-source-energy/) highlights an additional factor—the amount and cost of energy to acquire, transport, and treat water. This study argues that the cost of energy (usually electricity, but including fuel if water is trucked in) must be considered in pricing water. The study uses data for 2013, a year of severe drought in much of the western and central U.S. to show how water prices should be adjusted to guarantee supply and cover costs of acquisition. Although the U.S. Geological Survey indicates that the average energy required to provide 1000 gallons (1 kgal) of water is 1.9kWh of electricity, water stressed regions such as northern California (3.5 kWh/kgal) and highly stressed southern California (11.1 kWh/kgal) require far more (Figure 24). However, the study suggests that municipalities are not taking this factor into consideration in providing a durable and resilient water supply. During times of water stress, municipalities may have trouble meeting costs, and begin to examine other strategies, such as privatization. Of course, when water availability becomes restricted, costs can go up as in California with severe drought conditions (e.g., see this news article about California water pricing: In dry California, water fetching record prices).

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Figure 24. Variations in water price and examples where water is overpriced or underpriced in consideration of transport costs.
Source: www.energypoints.com

Learning Checkpoint

1. What factors drive water pricing?

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