Demand management in the water supply sector. Development of an integrated system for the evaluation of alternative water demand management policies

Water resources management has traditionally been based on supply driven strategies. Eliminating water excess demand has been viewed as a technological and managerial problem of increasing supply to meet demand. However, supply management policies have severe environmental and economic impact since they cause unnecessary local water resources depletion. In addition, engineering oriented solutions cause unnecessary high investment in water supply equipment. The concept of Sustainable Development offers an alternative approach to this issue that ensures an appropriate exploitation of water resources, which minimizes the adverse environmental impacts. Thus, alternative sustainable schemes need to be developed in the water supply sector with the goal of balancing appropriate water conservation and demand management policies with the development of new water supplies. Satisfaction of water needs require a demand-driven approach that recognizes the potential of water shortages. With demand for urban water overtaking supply at an increasing rate, urban water agencies face a new situation where the provision of reliable and affordable water services will depend as much on how they manage demand as on how they manage supply. Water supply authorities face the challenge of developing new comprehensive water policies with a water demand management orientation.Taking into account all of the above facts, this thesis deals with water demand management strategies in the water service and develops an integrated system that evaluates water conservation policies looking at economic and social aspects of water demand management. The aim of this thesis is to: analyze the social and economic parameters that shape the residential demand for water estimate the parameters that influence water demand by applying econometric models in order to estimate elasticities of water demand forecast water demand and estimate the Agencies’ revenues by applying alternative water demand management policies evaluate the efficiency and the effectiveness of alternative water demand management policies The outcome of this thesis is the generation of use of tools that enable the evaluation of alternative alternative water demand management policies while can be used by water authorities. This system comprises: 1. the collection of information and data 2. the use of database technologies together with geographical information systems for data processing 3. the exploration of the social parameters through a household survey 4. the estimation of residential water demand-elasticities 5. the evaluation of alternative water demand management policies based on forecasting water demand and Water Agencies’ revenues. This comprehensive methodology can answer important questions: How will rates affect Water Agencies’ capital program? How will a conservation program other than conservation rates will affect water consumption Why is the rates change needed, and why now? Does conservation undermine Water Agencies fundamental purpose of selling water? A case study system was made for the city of Thessaloniki-Greece residential customers. The most important conclusions are: Water Agency customers are offered unreliable level of the water supply infrastructure and have a low trust on tap water quality There is a high level of public awareness concerning current and future water related problems water consumers do not accurately evaluate the level of their own water consumption Luck of demand management policies in the past availed the augmentation of water use Price elasticity estimates of residential water demand that were found are -0.77 for the average model and -0.34 for the marginal one in the city of Thessaloniki. A well-informed (well educated) consumer (aware of water and techniques for its efficient use) has a negative effect on consumption. This means that education programs and information policies aiming at controlling demands can be effective tools for saving water. This study implies that the price increase should not be uniform for different blocks of the rate structure, ensuring modest charges for small water consumptions in order not to unnecessarily burden moderate water consumers. A restructure of the present increasing block rate structure at Thessaloniki should be considered in order to better serve as an incentive in the direction of saving water. More blocks with shorter ranges would be more efficient in this direction. The consumption boundary for the service charge (first block of the rate structure) should be removed and be replaced by new service charge, independent of the increasing block rate structure. As far as other policies in the direction of controlling water demand, it seems that non-economic policies such as education and information programs should also be considered and implemented