FRESNO — When residents of this parched California city opened their water bills for April, they got what Mayor Ashley Swearengin called “a shock to the system.”
The city had imposed a long-delayed, modest rate increase — less than the cost of one medium latte from Starbucks for the typical household, and still leaving the price of water in Fresno among the lowest across the entire Western United States. But it was more than enough to risk what the mayor bluntly admits could be political suicide.
“It wasn’t that long ago,” Ms. Swearengin said, “that people here were fighting the installation of water meters.”
Nearly 15 years ago and 1,000 miles away in Santa Fe, N.M., officials faced a similarly dire predicament when a drought came within a few thousand gallons of leaving the city without enough water to fight fires. But Santa Fe’s response was far more audacious.
Santa Fe, in addition to raising the basic cost of water, decided to make the heaviest users of water pay more — much more — for the water they consumed.
Known as tiered pricing, the system wasn’t new or unique to Santa Fe, but in no major city today are the tiers so steep, with water guzzlers paying three to four times more per gallon than more efficient consumers are charged.
In moving away from the idea that water should be cheap for everybody just because it is so essential to life, Santa Fe’s approach to water pricing offers lessons in how other parched cities can balance the societal costs of scarcer, more expensive water in a relatively equitable way.
Because of the huge gap between tiers, the biggest consumers effectively subsidize everyone else, shielding poorer residents from feeling the full brunt of rate increases.
“So much turns on pricing when it comes to water,” said Robert Glennon, a professor at the Rogers College of Law at the University of Arizona and the author of “Unquenchable: America’s Water Crisis and What to Do About It,” a 2009 book on water policy.
“The beauty of tiered pricing is that it doesn’t prevent people from using water, and it doesn’t rely on government regulations,” Mr. Glennon added. “But it insists you pay more for extra water for your lawn than for basic human needs.”
The tiered approach has worked as intended. Since 2001, Santa Fe’s total water consumption has dropped by a fifth, even as the high desert city’s population has increased more than 10 percent. When water costs more as its consumption increases, people respond exactly as an economics textbook would dictate: They use less.
Santa Fe has the most expensive water out of 30 American cities surveyed by Circle of Blue, a nonprofit news agency that focuses on water policy, and the city’s residents are among the thriftiest when it comes to turning on the tap. In Santa Fe per-capita water usage has plunged, falling from nearly 140 gallons a day in 2001 to about 100 now.
By contrast, in Fresno, which has a single, uniform price for water, per-capita usage was 222 gallons per day last year, after falling from even higher levels because of a variety of conservation efforts.
As many as two-thirds of California’s local water departments use some sort of tiered-pricing system, but none have gone as far as Santa Fe. And now the whole idea of relying on prices to help balance supply and demand faces major legal and political obstacles in the state.
Late last month, a California state appellate court panel ruled that a tiered pricing system in Orange County may violate state laws that prohibit local governments from charging more for services than they cost to provide.
The ruling drew fierce criticism from Gov. Jerry Brown, who is ordering Fresno and other California cities to reduce water usage by 25 percent. And the Orange County case, which was sent back to a lower court for further hearing, is one reason Mayor Swearengin says Fresno is not ready for tiered pricing even though, she says, “conceptually, I think it makes sense.”
Indeed, California may have few viable alternatives. New academic research suggests that a tiered system has a twofold benefit: It uses something akin to market pricing to encourage conservation but makes sure much of that burden is borne by those most able to afford it.