DATA PROVIDES INSIGHT
Water costs in the U.S. increased 6 percent in 2015 according to water resource research and consultancy firm Circle of Blue. A recent analysis of ENGIE Insight data shows the price of water steadily increasing since 2008, by an average of 40 percent across industry verticals. As the price of water continues to rise, more organizations are taking action to rein in their water spend. Nearly half of the more than 700 energy, sustainability, facility, and finance professionals we surveyed for our 2016 Energy and Sustainability Predictions: Findings from Leading Professionals report implemented water conservation measures in 2015. We expect to see a continued emphasis on water conservation across industries as water rates continue to climb.
Why is the cost of water increasing? According to the American Water Works Association (AWWA), water consumers are absorbing the cost of restoring and expanding a water infrastructure that is reaching—and in many cases has already surpassed—its useful life.
As a case in point, the state of Vermont saw one of the largest year-over year price hikes from 2013 to 2014 and data shows Vermont consumers pay the highest average cost per gallon in the nation at $20.59/kgal. While it may seem counterintuitive to see Vermont top the list ahead of drought-afflicted states like California and Arizona, water pricing in the U.S. is largely driven by infrastructure restoration and expansion efforts rather than resource scarcity.
Nationwide, the cost of water infrastructure restoration and expansion necessary to serve a growing and shifting population will cost at least $1.7 trillion through 2050 to maintain current levels of water service, according to the AWWA. The Association estimates restoration of existing service accounts for 54 percent of the bill and expansion of new service to support population growth and migration accounts for 46 percent. Its Buried No Longer: Confronting America’s Water Infrastructure Challenge report suggests that delaying the necessary investment will cost even more in the long term due to the degradation of water service, a rise in water service disruptions, and the mounting cost of emergency repairs.
In addition to the financial concerns raised by the AWWA report, there are real health and safety concerns that must be accounted for as states and water districts consider infrastructure investment. Those concerns recently came to bear in Flint, Michigan. Faced with increasing water costs in the midst of a tumultuous economic climate, the city made a decision to switch Flint’s water supply from Lake Huron to the Flint River while new state-run supply lines to Lake Huron were being installed. Unfortunately, in this case a cost-cutting measure created unsafe drinking water, a class-action lawsuit, a costly but necessary emergency response, and headline news.
As water consumers across the country absorb the cost of infrastructure investment through higher water bills, the AWWA predicts that water bills in some severely affected communities could triple as old infrastructure is replaced, new infrastructure is laid, and new water quality standards are put in place.
INSIGHT INSPIRES ACTION
In the face of steadily rising water prices, it’s incumbent upon organizations to take appropriate cost control measures. Our 2016 Energy and Sustainability Predictions: Findings from Leading Professionals report indicates that companies are doing just that. According to the report, the most popular corporate response to rising water bills are low-cost hardware improvements such as the installation of efficient faucet aerators or flush valves (28 percent) and behavioral changes through training and awareness programs (27 percent), with 57 percent of respondents indicating more than one water reduction initiative put in place in 2015. Among those intent on seeking no cost/low-cost energy and sustainability management opportunities, water efficiency was noted as one of the smartest investments made in 2015. In fact, those listing water conservation efforts as their smartest no cost/low-cost initiative more than doubled within the category year-over-year, from 9 percent in 2014 to 23 percent in 2015.
ACTION DRIVES RESULTS
With data-driven insight, organizations are well-positioned to take actions that address the cost of water. For instance, rising water prices can quickly put a strain on already tight margins in the quick serve restaurant (QSR) industry. In order to combat rising water prices, a number of QSR leaders have partnered with ENGIE Insight to develop aggressive, yet achievable water conservation goals. ENGIE Insight’s energy and sustainability experts partner with QSR clients to identify opportunities at the site level and implement water saving measures such as efficient faucet aerators, efficient pre-rinse spray valves, dipper well upgrades (from continuous flow to fill-on-demand), efficient plumbing, operational changes, and employee engagement programs. Combining equipment, operational and maintenance, and behavior-based changes helps our clients not only achieve their goals, but realize lasting results.
In another example, a hotel client partnered with ENGIE Insight to identify properties that were water usage outliers and set a reduction goal of three percent for 2015. To reach the three percent reduction goal, this hotel group implemented a water awareness campaign across all properties. The campaign included posting best practices signage at the back of the house, and properties were encouraged to participate in linen and towel reuse programs, where guests may opt to not have towels and linens changed daily during multi-night stays. The client also created and distributed a newsletter to all facility and housekeeping employees that ranks properties on water use, in order to create a friendly competition between properties and engage the employees more personally in business success.
While conservation efforts are an imperative in the effort to mitigate water costs, more proactive management is in order as organizations face new and complex water-related risks.
To learn more about how ENGIE Insight helps multi-site commercial and industrial business navigate rising water costs, implement water conservation measures, and develop aggressive yet achievable savings goals, visit engieinsight.com. For more information on water conservation priorities among U.S. businesses, download our 2016 Energy and Sustainability Predictions report.