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🚰 "Is It Time to Eliminate Water Rates?"

The Water Values Podcast

Photo by Jon Cellier / Unsplash

Host: Dave McGimpsey
Guest: Kendall Dix | National Policy Director | Gulf Coast Center for Law & Policy
Category: 🚰 Utilities | Water Rates

Podcast’s Essential Bites:

[13:19] “I think water is a human right and that a person's ability to pay shouldn't be affected by this. And we've seen over the years that shut offs are a really big problem for poor people. [It] affects about 5% of the country each year. […] During the COVID pandemic, that was a really big problem, since water is such a key part of sanitation and disease prevention. And some organizations have said that that was literally leading to people's deaths. […] I really wanted to put forth a different idea about how we could […] prevent shut offs, [and] that we could just make funding better overall for water utilities.

[14:59] “I think of water as a public good. And so I think that our utilities should be publicly funded. For the most part, they are. But they're not only funded by taxes, they're also funded by user fees, […] we call those water rates, and they're included in your bill. And so the way that I […] look at that is that user fees are really sort of taxes, but they're regressive. And they're really just not well administered.”

[15:47] “ Because people need water to live, the demand is really not that elastic. […] No matter what the rates are, people need water to live, so they're going to use it. For people that have more money, the amount of money that they spend on their water bill is, in some cases, completely negligible. But certainly, if you're poor, the amount that you spend on your monthly water bill has a much bigger effect on your disposable income. […] Rich people and poor people are being charged the exact same amount of money for water and so that ends up being a much bigger percentage of a poor person's income.”

[17:23] “If you think about the funding for water utilities, it is two giant knobs: […] taxes and […] user fees. I think what you do is you just turn the tax knob all the way up, and you turn the user fees all the way down. And so, you're not necessarily changing the way that they're funded, it's reallocating those numbers on the spreadsheet. And so this could have a small efficiency effect, because then you don't need billing and collections departments within water utilities. It could have a small redistributive effect, depending on what kind of taxes you're using. Because if you replace water rates, which I'm considering to be a regressive tax, […] with a progressive tax, you could have some benefit on low income families. And I also think that for utilities, this could provide some funding certainty.”

[18:29] “During droughts […] when people are being asked to conserve more water, that actually reduces revenue for utilities. And likewise, as water gets more expensive for people, and people aren't able to pay their water bills, then that also decreases funding for the utilities. […] For example, in New Orleans […] industry analysts say that water is unaffordable for 75% of low income families. And there's a certain point where you just can't get any more money out of people. And so that's also going to affect the water utility’s ability to fund itself. […] Ireland already does this. So they don't have water bills.”

[25:52] “If water shortages and rates were intimately connected, then you would expect to see Western states that have the highest rates. But in fact, some of the states that have the highest water rates are places like West Virginia, Connecticut, and New Jersey. And so what that tells me is that there's something else going on here when it comes to rates and water availability or water shortages. So if you think about a place like Connecticut, it's got a really high cost of living, and maybe that's driving the rates up. Or when you're thinking about West Virginia, you think of a place that's had significant disinvestment. […] There's a number of things that drive the cost of water, but not having enough of it is only one of them.”

[35:21] “I really think that universal water access is a basic human right, that really any functioning society should insure for its citizens, particularly in a wealthy one, like the United States. And so I think the best way to do this would be to just sort of shift the the user fee over to the tax side. I think that some people argue that rates and fees are necessary to curtail consumption. […] But I think that there's a lot more effective ways to do that, that's not going to harm poor people by denying them water.”

Rating: 💧💧💧

🎙️ Full Episode: Apple | Spotify | Google
🕰️ 40 min | 🗓️ 04/05/2022
✅ Time saved: 38 min

Additional Links:
Article: “Water for All” (Kendall Dix, 2022)