It seems crazy to propose a new tax. People generally dislike taxes, especially a new tax. Hear me out.
I propose a modest tax on all water used in Whatcom County during the critical months of July, August and September. These months are critical because water supply is especially low, water demand is especially high, and salmon and other wildlife suffer because of this imbalance. A tax would yield five major benefits:
▪ Higher summer prices would provide important economic signals to all users about when water is scarce (and therefore expensive) and plentiful (and therefore cheap), using markets and the adaptability of the private sector to solve problems. These price signals would encourage capital improvements and behavioral changes to increase efficiency of water use, which would reduce the pressure on water supplies.
▪ The tax would generate revenue to help solve local water supply and quality problems. For example, a countywide charge of 0.01 cent per gallon would generate $1.5 million a year. This money would increase the county’s budget for water projects by about 25 percent.
More efficient equipment that is also more expensive to buy will become cost-effective with higher water prices.
▪ Much Whatcom water use is now unmetered (primarily for agriculture). Installing meters for most of the currently unmetered water users would provide valuable data on water-use patterns and trends and encourage more efficient water use.
▪ The tax would help create local water markets. Such markets could help resolve problems related to water supply.
▪ The tax, and the public discussion leading to its approval, would signal citizens that water is a critical and scarce resource that needs to be used wisely. The tax would be an important communication mechanism to increase public awareness and knowledge of local water problems.
A charge of 0.01 cent a gallon is less than a 1 percent rate increase for large industrial customers; it would amount to less than $3 a year for the typical Whatcom County family. The agricultural sector, because it accounts for two-thirds of summer water use, would pay about $1 million a year for this surcharge, less than 1 percent of the value of agricultural products.
Raising the price of water through a tax reduces the need for regulation because the price increase spurs market forces to automatically and appropriately allocate water among competing uses.
Higher prices will encourage efficiency (often in ways we cannot predict). As examples, low-flow toilets and front-loading washing machines use much less water than their conventional counterparts. More efficient equipment that is also more expensive to buy will become cost-effective with higher water prices. Efforts to detect and repair leaking water systems will be more cost effective and, therefore, more likely to be adopted, as will reuse of treated wastewater for nonpotable uses. In general, price increases stimulate behavioral changes to reduce water use (e.g., shorter showers), encourage capital investments (e.g., low-flow showerheads and toilets), and motivate supply projects (e.g., desalination) that would otherwise be uneconomic.
Seasonal water pricing would encourage homeowners to water their lawns less often, for shorter times, and at times of the day (early morning or late evening) when the lawn can better absorb the water.
Farmers, faced with higher water prices, will irrigate more efficiently. Their applications of water will be more carefully timed and controlled to minimize evaporation and runoff and to maximize absorption by the soil and plant roots. They will use more efficient equipment that applies the water closer to the plants. Irrigation scheduling will become more precise, based on soils, crop, weather and irrigation system. And farmers will, over time, shift to crops that require less water.
The Department of Ecology notes that “The waters of Washington state collectively belong to the public and cannot be owned by any one individual or group.” Because the public owns the water, it is reasonable to tax its use to promote efficiency, raise money for water projects, encourage water markets, improve the amount and quality of data on water consumption and increase public awareness.
ABOUT THE AUTHOR, SERIES
This is one of a continuing series of columns about the water problems and potential solutions in Whatcom County.
Eric Hirst holds a doctorate in engineering from Stanford University and worked for 30 years as an energy policy analyst at Oak Ridge National Laboratory. Since moving to Bellingham more than 12 years ago, he has served on three advisory committees for the city of Bellingham, was involved with the formation and early operation of the Whatcom County chapter of Futurewise and served on the board of RE Sources for Sustainable Communities.
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