The influence of the operational environment on the efficiency of water utilities

Adjusting for the operational environment in studies of performance measurement is very important, otherwise the analysis may lead to unrealistic scores, especially when its influence on costs is high, such as in the water utilities. In this paper, we study the influence of exogenous variables on the water utilities performance by applying conditional efficiency measures based on the order-m method and its probabilistic formulation. We use a sample of 66 water utilities operating between 2002 and 2008, representing about 70% of the Portuguese population. Our research suggests that inefficiency of Portuguese water utilities is substantial for some utilities: several exogenous variables might influence it considerably. For example, regulation has a positive influence on efficiency but when drinking water supply and wastewater services are provided by the same utility or when the wholesale and retail activities are provided together, the performance is lower. The effect of ownership is inconclusive and the variables residential customers, water source, peak factor, and density of customers have a mixed influence on performance which varies according to their scores.     

Gauging the Vulnerability of Local Water Systems to Extreme Events

Water utilities that rely on surface water may be vulnerable to future droughts and floods, a vulnerability that may be magnified by climate perturbations as well as shorter-term and, in some cases, ongoing changes in the political and regulatory environment in which utilities operate. Unfortunately, day-to-day responsibilities currently occupy most utility operators, leaving little time to plan for inherently uncertain effects. The record of actual responses to past droughts and floods can be illuminating, however, particularly when placed in the context of plausible hydrologic disruption and pressures such as population growth, floodplain development and new regulatory demands. This paper draws on interviews with water utility operators in the northwestern USA to highlight opportunities and constraints that water utilities may face vis-à-vis such disruptions. Key considerations affecting vulnerabilities include water rights, institutional barriers to efficient utility operations, hazard management policy and the fiscal status of utilities.     

Economic and environmental optimization of a multi-site utility network for an industrial complex

Most chemical companies consume a lot of steam, water and electrical resources in the production process. Given recent record fuel costs, utility networks must be optimized to reduce the overall cost of production. Environmental concerns must also be considered when preparing modifications to satisfy the requirements for industrial utilities, since wastes discharged from the utility networks are restricted by environmental regulations. Construction of Eco-Industrial Parks (EIPs) has drawn attention as a promising approach for retrofitting existing industrial parks to improve energy efficiency. The optimization of the utility network within an industrial complex is one of the most important undertakings to minimize energy consumption and waste loads in the EIP.In this work, a systematic approach to optimize the utility network of an industrial complex is presented. An important issue in the optimization of a utility network is the desire of the companies to achieve high profits while complying with the environmental regulations. Therefore, the proposed optimization was performed with consideration of both economic and environmental factors.The proposed approach consists of unit modeling using thermodynamic principles, mass and energy balances, development of a multi-period Mixed Integer Linear Programming (MILP) model for the integration of utility systems in an industrial complex, and an economic/environmental analysis of the results. This approach is applied to the Yeosu Industrial Complex, considering seasonal utility demands. The results show that both the total utility cost and waste load are reduced by optimizing the utility network of an industrial complex.     

System dynamics modeling for municipal water demand estimation in an urban region under uncertain economic impacts

Accurate prediction of municipal water demand is critically important to water utilities in fast-growing urban regions for drinking water system planning, design, and water utility asset management. Achieving the desired prediction accuracy is challenging, however, because the forecasting model must simultaneously consider a variety of factors associated with climate changes, economic development, population growth and migration, and even consumer behavioral patterns. Traditional forecasting models such as multivariate regression and time series analysis, as well as advanced modeling techniques (e.g., expert systems and artificial neural networks), are often applied for either short- or long-term water demand projections, yet few can adequately manage the dynamics of a water supply system because of the limitations in modeling structures. Potential challenges also arise from a lack of long and continuous historical records of water demand and its dependent variables. The objectives of this study were to (1) thoroughly review water demand forecasting models over the past five decades, and (2) propose a new system dynamics model to reflect the intrinsic relationship between water demand and macroeconomic environment using out-of-sample estimation for long-term municipal water demand forecasts in a fast-growing urban region. This system dynamics model is based on a coupled modeling structure that takes into account the interactions among economic and social dimensions, offering a realistic platform for practical use. Practical implementation of this water demand forecasting tool was assessed by using a case study under the most recent alternate fluctuations of economic boom and downturn environments.     

U.S. Electric Utilities and Renewable Energy: Drivers for Adoption

Renewable energy can address rising demand for energy, environmental protection, energy security, and job creation. This paper assesses resource, economic, social, and political drivers for the adoption of renewable energy. Analysis of the data collected from over 100 interviews with utility managers reveals that production tax credits significantly influence the percent of renewable energy in a utility's portfolio. The availability of renewable energy resources, economic drivers, social influences, and political drivers such as renewable portfolio standards and government grants are not significant drivers. Understanding these drivers can help electric utilities, governments, and other stakeholders with their efforts to reap the benefits of renewable energy.     

Cities vs. agriculture: A review of intersectoral water re-allocation

Water demand management, or making better use of the water we have — as opposed to augmenting supply — is increasingly proposed as a way of mitigating water-scarcity problems. Moving water away from agriculture to uses with higher economic value is one of the main measures widely seen as desirable. Sectoral "allocation stress" is seen as resulting from the disproportionate share, and inefficient use of water in the agricultural sector. This apparent misallocation is often attributed to the failure of government to allocate water rationally.
This paper revisits this commonly-accepted wisdom and examines the nature of urban water scarcity, showing the importance of economic and political factors, shaped by incentives to decision-makers, and sometimes compounded by climatic conditions. It shows that cities' growth is not generally constrained by competition with agriculture. In general, rather than using a narrow financial criterion, cities select options that go along the "path of least resistance," whereby economic, social and political costs are considered in conjunction. The question of allocation stress is thus reframed into an inquiry of how transfers effectively occur and can be made more effective.     

Development of performance indicators for small Quebec drinking water utilities

This study presents a comparative performance analysis of small drinking water utilities in Quebec (Canada). The investigation bears on 10 utilities that use surface water or groundwater under the direct influence of runoff and apply chlorination as the only treatment before distribution. The utilities under study were divided into two groups: four utilities that had never or rarely provided water violating provincial drinking water microbiological standards (relating to fecal and/or total coliform bacteria), called nonproblematic utilities, and six utilities that quite often violated the standards, designated as problematic utilities. The objective of the study is to develop utility performance indicators capable of explaining current and historical distributed water quality. Indicators are based on operational, infrastructure, and maintenance characteristics of utilities that are integrated using a multivariable weight-based index. Results show that utility performance indicators are systematically better for the nonproblematic group of utilities as compared to the problematic group. Disinfection-related, infrastructure, and maintenance variables are those that most contributed to indicator values. Sensitivity analyses served to assess the impact on indicator results of excluding variables and changing their weights.     

A CATALYST FOR REGIONALIZATION OF RURAL WATER SYSTEMS1

ABSTRACT: The National Regulatory Research Institute has recommended the merger of small rural water districts in the United States. Success at bringing about merger of these districts, which contain fewer than 3,500 customers, has been highly limited. The subject of this paper is a demonstration project that may act as a catalyst to achieve the desired goal of regionalization. A computerized hydraulic data management program (CHDMP) was developed for a case study in Nelson County, Kentucky. University professors, graduate students, and two water utilities’ staffs cooperated in network analysis employing computer hardware and software. The utilities’ staffs were taught the science and technology of hydraulic model preparation, simulation, and analysis for the case study distribution systems. As an integrated system, the model contained 294 pipes, 234 nodes, six pumps, and 11 tanks. Each utility's problem areas were identified and some of the individual and mutual benefits of hydraulic planning were illustrated. A dialogue resulted between the managers. Each manager described his goals and agreed that, although political merger was not feasible at the present time, future economic factors could be a definite influence in reversing that decision.     

Bilateral Monopoly: A Market for Intercountry River Water Allocation

/ Collaboration of countries with an aim to share fresh surface water resources promises to generate potential joint benefits. Unfortunately, existing agreements lack the perspective and capacity to produce any real action in efficient cross-border water allocation. When that problem is encountered by any two adjacent countries claiming riparian rights to the same watercourse, this paper suggests that apossible solution to be examined is a water market. This market requires the relevant countries to engage in a bargaining process as described in the theory of bilateral monopoly. The bargaining process should determine both the water quantity to be transferred and the price to be paid. However, there has to be a fair allocation of the joint benefits resulting from the transfer for a sustainable price solution. As an empirical illustration, the paper examines the case of river Nestos shared by Bulgaria and Greece in the southern Balkans. A net revenue function quadratic in water is specified and estimated using scarce data on three agricultural crops in Greece. Sensitivity analysis on the size and distribution of the net benefits is also performed.KEY WORDS: Bilateral agreements; Water markets; Efficient allocation     

Smart meters for enhanced water supply network modelling and infrastructure planning

To design water distribution network infrastructure, water utilities formulate daily demand profiles and peaking factors. However, traditional methods of developing such profiles and peaking factors, necessary to carry out water distribution network modelling, are often founded on a number of assumptions on how top-down bulk water consumption is attributed to customer connections and outdated demand information that does not reflect present consumption trends; meaning infrastructure is often unnecessarily overdesigned. The recent advent of high resolution smart water meters allows for a new novel methodology for using the continuous ‘big data’ generated by these meter fleets to create evidence-based water demand curves suitable for use in network models. To demonstrate the application of the developed method, high resolution water consumption data from households fitted with smart water meters were collected from the South East Queensland and Hervey Bay regions in Australia. Average day (AD), peak day (PD) and mean day maximum month (MDMM) demand curves, often used in water supply network modelling, were developed from the herein created methodology using both individual end-use level and hourly demand patterns from the smart meters. The resulting modelled water demand patterns for AD, PD and MDMM had morning and evening peaks occurring earlier and lower main peaks (AD: 12%; PD: 20%; MDMM: 33%) than the currently used demand profiles of the regions’ water utility. The paper concludes with a discussion on the implications of widespread smart water metering systems for enhanced water distribution infrastructure planning and management as well as the benefits to customers.     

The environmental audit. II. Application to stream network design

The planning and execution of water quality management programs requires careful collection and analysis of data coupled with a systematic review and analysis of programmatic success. The environmental audit is a tool which facilitates improved water quality planning and management. This article demonstrates the utility of the environmental audit by reviewing portions of a comprehensive review of the water quality management program for the state of Idaho. The audit is a tool which forces careful design of a sampling program before data are collected. In the audit approach, program objectives are clearly stated prior to initiation of sampling. Stated objectives are also evaluated regularly to identify tension points, that is, conflicts between expectations and reality. In the example taken from Idaho, a management review team followed a directive to redesign the water quality monitoring program. We present a summary of the redesign as proposed by that team, to illustrate the results of a typical review of monitoring programs. That summary is followed by an example of how the proposed program would differ if the audit approach had been used. The two approaches offered both coincident and conflicting recommendations. Management review team and audit recommendations for lake sampling programs were similar even though a different process was used to develop the recommendations. The most striking contrast between the two results lies in the review team's approach to the problem. The directives followed, and the team's responses, concentrate on tools, such as increasing biological monitoring or reliance on monthly BWMP stations. In contrast, the audit results stress addressing management questions for which clear objectives have been stated, depending on specific tools only as needed to meet stated objectives. Although the audit does integrate externalities in its structure, it is little affected by economic or political influences. A major strength of the audit approach is its ability to provide defensible data for management decision making.     

Integrated urban water resources management

The paper focuses on the organizational and institutional issues of water resources management strategies. It considers both as cross-sectoral issues, and in terms of the communication and coordination of activities among all levels of sector agencies. It concentrates heavily on the economic aspects of planning for urban and other water use. Over the past few decades tremendous progress has been made in providing basic water supply and sanitation to the people of the world. Nevertheless, much remains to be accomplished. The only way of resolving this problem appears to be to make the current utilities more effective economically. The single most important policy improvement would be to ensure that each utility covers its operating costs as well as its capital costs by the economic pricing of water use.     

AN ASSESSMENT OF WATER UTILITY INFORMATION SYSTEMS AND THEIR USE OF COMPUTERS1

To provide an overview of water utility information systems and the extent of computer use, a direct mail survey of all water utilities serving populations of 2,000 or more in the tri-state area - Ohio, Indiana, and Kentucky - was conducted. The following was determined: 1) utility profile information, e.g., public/private ownership, age, number of accounts, etc.; 2) an assessment of the degree of computerization presently in place to perform various functions; and 3) an assessment of any plans that the utilities may have for future computerization. To analyze the data, an index of computerization was defined as the number of departments or major activity areas of each utility that presently have some computerization. The relationship between the degree of computerization (measured by this index) and a utility's profile in terms of population served, annual revenue generated, and the number of customer accounts is discussed for each state in the survey. Discriminant analysis revealed strong significant differences between utilities that plan to use computers and those that do not. The differences were identified by the authors. Survey results revealed a rather limited use of computers in the tri-state area. Enormous potential exists in small and medium sized utilities for computerization to improve operational efficiency.     

MODELING WATER UTILITY FINANCIAL PERFORMANCE1

ABSTRACT: The purpose of this paper is to present a theory and model for assessing the financial health of public water systems. Using financial information from 25 water utilities in Georgia, the paper seeks to identify the causal relationships between the financial performance of a water utility and its fiscal position. The need for a theoretical understanding of water utility financial health is the result of the increasingly stringent performance requirements under the Safe Drinking Water Act (SDWA). The issue has become particularly important for small water systems that will be exposed to significant financial demands. A set of financial ratios were developed and tested in a model that was based on liquid asset theory. The model contained five variables designed to account for the size of liquid assets, current debt, cash-flow, and the level of expenses. The variables fit the need of water utilities: to provide an adequate level of operation and maintenance to meet current and future system needs as well as SDWA standards.     

CONSERVATION PRACTICES AND ATTITUDES AMONG MARYLAND WATER SUPPLY MANAGERS1

ABSTRACT: In addition to offsetting water supply shortages, water conservation is recognized as serving many purposes, ranging from reduced energy consumption to lower capital costs. Since the discussion of these benefits has been a recent development and has generally excluded local water supply managers, a question arises as to whether supply managers are implementing conservation programs to exploit these benefits. A survey of the managers at 35 Maryland water utilities provides insight into the prevailing attitude toward conservation in a water rich eastern state. The results indicate that most managers continue to view conservation only as a short term response to temporary supply shortages. Only 12 Maryland utilities have undertaken any form of water conservation activity and just two systems have ongoing, comprehensive conservation programs. Institutional, perceptual, economic, political, and time constraints all contribute to the managers’attitudes and general inaction. If water conservation is to be widely practiced, these issues must be addressed and the benefits attributed to conservation must be better documented and articulated to supply managers.     

How does the operational environment affect utility performance? A parametric study on the waste sector

The urban waste treatment service has been a sensitive issue for the Portuguese governments in the past decades. Among other measures, the environmental and economical issues led to the creation of a sector-specific regulator for the waste sector. Considering this atypical circumstance in the worldwide context it is worth studying the external factors that may influence the waste utilities efficiency along with the regulation role. In this regard, we applied the parametric approach of the stochastic frontier analysis to evaluate the influence of the operational environment on the urban waste services performance. The sample included 32 utilities responsible for the waste treatment service in Portugal. The results showed a negative influence of factors, such as the existence of regulation, the distance to the waste treatment facilities and the provision of other services on utility performance. We also observed some benefits from privatisation and incineration, although these options have some particular features.     

Nonstationary Water Planning: An Overview of Several Promising Planning Methods1

Waage, Marc D. and Laurna Kaatz, 2011. Nonstationary Water Planning: An Overview of Several Promising Planning Methods. Journal of the American Water Resources Association (JAWRA) 47(3):535‐540. DOI: 10.1111/j.1752‐1688.2011.00547.x Abstract: Climate change is challenging the way water utilities plan for the future. Observed warming and climate model projections now call into question the stability of future water quantity and quality. As water utilities cope with preparing for the large range of possible changes in climate and the resulting impacts on their water systems, many are searching for planning techniques to help them consider multiple possible conditions to better prepare for a different, more uncertain, future. Many utilities need these techniques because they cannot afford to delay significant decisions while waiting for scientific improvements to narrow the range of potential climate change impacts. Several promising methods are being tested in water utility planning and presented here for other water utilities to consider. The methods include traditional scenario planning, classic decision making, robust decision making, real options, and portfolio planning. Unfortunately, for utilities vulnerable to climate change impacts, there is no one‐size‐fits‐all planning solution. Every planning process must be tailored to the needs and capabilities of the individual utility.     

Feasibility of water purification technology in rural areas of developing countries

Water scarcity is threatening social and economic growth in rural areas of developing countries. There are potential markets for water purification technologies in these regions. The main focus of this article is to evaluate the social, economic and political feasibilities of providing water purification technologies to rural areas of developing countries. The findings of this research can serve as the basis for private investors interested in entering this market. Four representative regions were selected for the study. Economic, demographic, and environmental variables of each region were collected and analyzed along with domestic markets and political information. Rural areas of the developing world are populated with poor people unable to fulfill the basic needs for clean water and sanitation. These people represent an important group of potential users. Due to economic, social, and political risks in these areas, it is difficult to build a strong case for any business or organization focusing on immediate returns on capital investment. A plausible business strategy would be to approach the water purification market as a corporate responsibility and social investing in the short term. This would allow an organization to be well positioned once the economic ability of individuals, governments, and donor agencies are better aligned.     

Potential for electricity savings by reducing potable water consumption in a city scale

Nowadays, it is very important that water and energy resources are used appropriately as this is a challenge to promote sustainable development. In some sectors, such as water and sewerage utilities, energy consumption depends on water consumption. The main objective of this work is to estimate the potential for electricity savings in a water and sewerage utility by reducing potable water consumption in the residential, commercial and public sectors in the city of Florianópolis, southern Brazil. These three sectors account for 98.9% of the total water consumption in the city. By using data related to energy consumption and costs that apply to the local water utility for water and sewage treatment, and also the potential for potable water savings over the three sectors, it is possible to estimate the potential for energy savings by reducing potable water consumption and sewage treatment. Potable water savings were estimated by using data available in the literature about water end-uses for different types of buildings located in Florianópolis. Three options were considered: installing dual-flush toilets, reusing greywater and using rainwater. The average potential for potable water savings were 30.0%, 53.4% and 60.3%, respectively, for the residential, commercial and public sectors. Thus, the average potable water savings amount to about 10,153,835 m³/year, and the electricity savings amount to 4.4 GW h/year, which would be enough to supply 1217 houses or flats in Florianópolis, with an average energy consumption of 300 kW h/month.     

Public Versus Private: Does It Matter for Water Conservation? Insights from California

This article asks three connected questions: First, does the public view private and public utilities differently, and if so, does this affect attitudes to conservation? Second, do public and private utilities differ in their approaches to conservation? Finally, do differences in the approaches of the utilities, if any, relate to differences in public attitudes? We survey public attitudes in California toward (hypothetical but plausible) voluntary and mandated water conservation, as well as to price increases, during a recent period of shortage. We do this by interviewing households in three pairs of adjacent public and private utilities. We also survey managers of public and private urban water utilities to see if they differ in their approaches to conservation and to their customers. On the user side we do not find pronounced differences, though a minority of customers in all private companies would be more willing to conserve or pay higher prices under a public operator. No respondent in public utility said the reverse. Negative attitudes toward private operators were most pronounced in the pair marked by a controversial recent privatization and a price hike. Nonetheless, we find that California’s history of recurrent droughts and the visible role of the state in water supply and drought management undermine the distinction between public and private. Private utilities themselves work to underplay the distinction by stressing the collective ownership of the water source and the collective value of conservation. Overall, California’s public utilities appear more proactive and target-oriented in asking their customers to conserve than their private counterparts and the state continues to be important in legitimating and guiding conservation behavior, whether the utility is in public hands or private.