Presented at the Texas Water Conservation Association Conference in The Woodlands, Texas - March 2014

1. Invite to TWDB Webinar on
Model or Questions
• Jennifer J. Walker, P.E., D.WRE, CFM
o President, Watearth, Inc.
o jwalker@watearth.com
o 832.444.0663
o www.watearth.com

2. Project Team
• Texas Water Development Board
o John Sutton
• Watearth, Inc. – Prime
o Jennifer J. Walker, P.E., D.WRE, CFM
• NewGen Strategies & Solutions, LLC
(Formerly J. Stowe & Co.)
o Chris Ekrut
• RPS Espey
o Michael Pinckney, P.E.

3. Research
Project
• Determining
Cost Benefit
and Demand
Savings of
Municipal
Water
Conservation
Efforts

4. Model Assumptions

5. TWDB Water Conservation
BMPs Modeling Tool
• Water Conservation Benefits of
BMP Implementation by Customer
Class
• 32 BMPs in Model
• Analyze 1 or Multiple BMPs
• Cost-Benefit Analysis
• Avoided Costs for
Water/Wastewater Facilities

6. TWDB Water Conservation
BMPs Modeling Tool
• Indoor Fixtures – SF, MF
• Surveys – SF, MF, and ICI
• Outdoor BMPs
o Irrigation Nozzles and Controllers
o Irrigation Efficiency Evaluations
o Landscape Water Budgets
o Water Efficient Landscape Design

7. Economic Calculations
• Economic calculations are optional and
not essential to overall model function
• Examples presented herein are samples
based on placeholder data and are not
reflective of a particular program or
experience
• The model’s quantitative results are
useful for decision-making, but other
non-economic qualitative factors may
direct ultimate course of action

8. Economic Calculations
• Model produces two key metrics
o Benefit-Cost Ratio (“BCR”)
― Designed to quantify economic efficiency of
BMPs
― Assists decision makers in program
implementation to achieve the “biggest bang
for your buck”
o Lost Water and Wastewater Revenue
― Reduced water use = less revenue

9. Benefit-Cost Ratio (BCR)
• Compares cost of implementation with
benefits of program
BCR > 1 = Benefits outweigh cost
(Economically Viable Alternative)
BCR < 1 = Costs outweigh benefits
(Not Economically Viable)
• BCR value can assist in ranking and making
decisions based on economic efficiency
However qualitative benefits may override
quantitative results
• Calculated in Real Dollars and Present Value

10. Benefits Considered
• Avoided Variable
Costs
― Wholesale Water Supply
(Variable Portion)
― Groundwater Production
Fees
― Variable Water Operations
and Maintenance (“O&M”)
― Wholesale Wastewater
Treatment (Variable Portion)
― Variable Wastewater O&M
• Costs adjusted annually
for inflationary impact

11. Benefits Considered
• Delayed Capital Investment and O&M
― Model allows for input of future water supply projects
including cost and capacity
― Using inputs as a baseline, model calculates annual
capital and O&M costs with and without
Conservation impact
― Calculations are then compared and variances due
to delayed investment are considered a benefit of
the program
• Model currently only considers benefits in
delayed water investment – future updates
could consider wastewater investment

12. Costs Considered
• Cost of BMP Implementation
― Direct Labor and Materials
― Indirect Administration and Overhead –
Includes Program Marketing and Outreach
― Cost of Customer Rebates

13. Sample BCR Result
BMP not economically
viable, Costs outweigh
Benefits
BMP is economically viable,
Benefits outweigh Costs
Higher BCR indicates
greater economic viability

14. Lost Revenue Calculations
• Model calculates reduction in water and
wastewater volumes
• Annual reductions are then multiplied by the
current effective rate for water and
wastewater service to determine lost revenue
o No adjustment made at this time for future rate increases
• Does not reflect fixed or variable cost
reductions at this time
o As cost reductions occur, needed revenue will decrease
o Future updates could consider revenue loss on a net basis

15. Sample Lost Revenue
Calculation
• Program will result in
estimated lost revenue
of over $37,000
• Utility’s variable costs
will be decreased by
approximately $12,000
• Rates will need to be
increased/fixed costs
decreased by $25,000
to account for the
utility’s remaining,
unrecovered fixed cost

16. Decision Support / Impact Planning
• Primary benefit of economic quantification
is decision support and assessment of
program impact
Overall Program is
economically viable
Assuming no reduction in
current Fixed Costs, revenue
impact of conservation is
significant
“It’s tough to tell the consumer that ‘Yeah, well, you guys did a great job out there
conserving water, but lo and behold, we got hurt financially, so we’ve got to raise your
rates,’”
– Jim Dockery, Asst. CM, Wichita Falls – Texas Tribune; February 10, 2014