If you live in a desert with a very limited water source and there are a lot of people around, ignore what I am about to say. If you live in a place where water falls from the sky regularly, let me be a Green heretic and go against the common wisdom by saying:
Use all of the water you need.
Doing so makes the most sense financially, and really sets us up to be able to provide for future needs. Here’s why: A utility needs to maintain a certain amount of equipment. They also need to do functions like billing and customer service. All of these things require a certain number of people. Once you get past a certain threshold of water production, the number of people needed does not change that much if you increase the amount of water needed. You still need a certain number of people to maintain the equipment, and usually you’ll just buy the same numbers of larger equipment if you need more production, rather than buy more pumps, motors, etc…. The larger equipment in fact will usually be more efficient, meaning the cost to produce each gallon will decline as the utility produces more water.
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The other factor is that most of the cost is people, not electricity or other resources. Sure, you will use more electricity cleaning and pumping more water, but again the cost per gallon produced will probably decline as you use bigger, more efficient equipment. Unless the number of customers changes dramatically, you’ll also still need to be paying the same number of people to send out bills, maintain equipment, and do other administrative tasks. In fact with modern computer tools, things like billing cost about the same whether you have a million customers or two million. Customer interaction things like the service desk are the only areas where more employees may be needed. If you cut the use per customer, you’ll save a little on electricity, but you’ll still have all of the other costs. Since the utility will be producing fewer gallons, yet their costs will stay about the same, you’ll end up paying more for less water.
So lets say that you decide to turn off the water while you soap up in the shower, then just turn the water on briefly to quickly wash off, cutting your shower water usage from 20 gallons per shower to three gallons. You might be able to cut your water bill by doing this. But let’s now say that everyone in the town does so, such that the utility now sells 5 million gallons of water each year instead of 10 million. They still have the same equipment, which they’re probably paying off on a 30-year bond or something. They also still have the same number of customers, meaning they will still need to send out the same number of phone calls and send out the same number of bills. They also have the same number of homes to supply, meaning they’ll need to do the same number of repairs and upgrades. They might even discover that sewer line repairs will become more frequent since there will be less water mixed in with the sludge, causing pipes to clog. The result will be that you’ll end up paying the same amount each month for your water bill as you were when you took a regular shower, yet you’ll have a miserable shower in the morning instead of a pleasant one.
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Utilities are also loath to cut employees, so they probably won’t slash staff even if they didn’t need as many people. They’ll also still need to pay off the equipment they bought when there was more demand, so they’ll still need the same amount of money to operate. They have no competitors so it isn’t like customers will transfer somewhere else if prices are raised, and the regulators aren’t likely to demand that they cut staff or swallow the costs of equipment they purchased when there was more demand, so the utilities can just say they need to raise prices due to cuts in usage and they’ll be able to do so. You use half of the water, but your bill stays the same since the price per gallon doubles.
So instead of conserving and saving, use what you need. This doesn’t mean that you should be wasteful with water. Don’t leave a hose on, running water down the street all day for no reason. Don’t leave the shower running through the night while you sleep. It just means to use what you need to live a comfortable life so that the utility will set themselves up to produce that much water.
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But what about the power usage? Shouldn’t we save the energy needed to make water? The free markets have a great way of figuring out ways to meet needs. If everyone cuts back to nothing, such that the amount of power we produce is easily made using existing technologies and infrastructure, we’ll never see improvements. We want people to be building the infrastructure and developing the technologies we need to supply the power needed int he future. If we use the amount we need (again, not being wasteful), we’ll see people come forward to build the needed infrastructure and make power more efficiently and with resources we don’t currently use extensively like biomass, solar, and wind. So we can either conserve and be miserable, never providing entrepreneurs and industrialists with the incentive to improve things, eventually needing to cut back even further as populations expand, or we can use what we need and provide the funding and incentive to make cold fusion or cars that run on water. I say use what you need.
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Disclaimer: This blog is not meant to give financial planning or tax advice. It gives general information on investment strategy, picking stocks, and generally managing money to build wealth. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. Tax advice should be sought from a CPA. All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.
