From Policy Implementation

Panopticon

What happens when governments ask the public to report water waste?

Ever feel like you're being watched?

Rainfall has been low, the mountain snowpack is thin, and Californians are bracing for another year of scarcity. But this time we've got a raft of data from the historic 2014-2017 emergency to inform drought management in 2021.*

As the drought ravaged California in 2014, the State Water Resources Control Board (SWRCB) issued several orders restricting discretionary outdoor water use like lawn watering and car washing. A revival of these restrictions may be coming this summer, so it’s useful to look at their implementation during the last drought.

If you see something, say something

As with any regulation, enforcement of water use restrictions requires monitoring--after all, you can't enforce a rule if you don't know who is breaking it. Water management agencies sometimes use inspections or patrols to spot violations. Citizen participation can augment agencies’ monitoring capacity, and so often governments invite the general public to join in the effort. Public management researchers call this implementation strategy participatory surveillance.

Participatory surveillance became part of the Golden State’s water conservation regulatory regime during the 2014-2017 drought, as state and local agencies provided telephone hotlines and websites for the public to report water waste anonymously. California communities responded with gusto: over the 32-month emergency, water utilities logged more than 485,000 water waste reports. In a new Water Resources Research paper, Youlang Zhang, David Switzer, and I analyzed water waste reporting across 408 water systems during the 2014-2017 emergency—with important implications for 2021 and beyond.

What kinds of communities get the most water waste reports?

We marshaled a variety of data to explore the factors correlated with water waste reporting, measured as monthly reports per thousand population. Unsurprisingly, the drought severity and the strictness of local water restrictions were among the strongest predictors of complaints: as the drought worsened and restrictions tightened, reports of water waste increased. But our analysis also identified significant social, institutional, and political correlates of reporting.

Education. Water waste reports correlated positively with the share of a community’s population with a college degree—even after adjusting for income, poverty, and racial/ethnic composition. A more educated public, it seems, generates more water waste complaints:

Institutional structure. A clear ordered relationship between utility ownership/organization and water waste reports emerged in the data: all else equal, municipal utilities got the most participation, followed by special districts, with investor-owned utilities getting the lowest participation:

We think that these disparities mainly have to do with familiarity. Municipalities are in most situations far more visible to the public than special district governments and investor-owned systems, and so garner greater media attention and citizen participation.

Party competition. We expected higher voter turnout to correlate with greater water waste reporting, but our analysis didn’t find any significant relationship between the two. However, we found that the composition of the local electorate predicted participatory surveillance in a surprising way: water waste reporting was higher in communities where the electorate was closely divided between Democrats and Republicans.

We measured partisan competition as one minus the local difference between registered Democrats and Republicans, divided by total registered voters.** Are hardcore partisans tattling on their opposition party neighbors? Maybe, but we suspect that heightened party competition simply indicates a more civically engaged public.

Does water waste reporting lead to greater conservation?

We also analyzed the correlation between water waste complaints and conservation outcomes, using the SWRCB’s official measure of conservation (current water use compared with the same month in pre-drought 2013). Yes, waste complaints positively correlated with subsequent water conservation. Substantively, one more complaint per thousand persons predicts a 0.56% increase in monthly water conservation. This effect is small in percentage terms, but represents a great deal of water in a state as big as California: one more complaint per thousand persons per month for each utility would have resulted in 32 billion gallons more water saved during the emergency—enough supply San Francisco for 16 months.

So is participatory surveillance a good idea for water utilities?

With the data on hand we can’t say for sure that participatory surveillance caused the conservation we see. But the results are consistent with the idea that public engagement expands monitoring capacity and suggests that participatory surveillance can enhance the effectiveness of urban water restrictions. More generally, inviting the public to report maintenance or water quality problems could be a useful way to put more “eyes on the street” and help water utilities perform better.

But it’s also clear that participatory surveillance is a social phenomenon, so water waste reporting is likely to work better in some places than others. Authorities looking to manage drought in California and elsewhere should bear in mind that demographic, institutional, and political contexts can condition the effects of public reporting strategies.

Irrigation Karen coming your way

In deputizing the masses, participatory surveillance also changes relationships between citizens, and so could deepen social divisions when people report each other for breaking the rules. Whether the promise of participatory surveillance as a way to strengthen water restrictions justifies its possibly divisive social side-effects is a harder, more fundamental question.



*In past posts I’ve analyzed decoupling, wholesale supply contracts, and enforcement of irrigation restrictions from the last California drought.

**If a utility service area was entirely dominated by one party (i.e., 100% of registrations), then the value of the party competition index would be zero. If the area was evenly divided between Democrats and Republicans (50% Dem, 50% GOP), the value of this party competition index would be one.

Ready, Fire, Aim

Managing the $638 million low-income water & sewer assistance in the federal COVID relief package

As frequent readers of this page likely know, the COVID relief bill that Congress passed in December included $638 million for low-income water and sewer bill assistance. Despite its high-falootin’ mouthful of a name, the Low-Income Household Drinking Water and Wastewater Emergency Assistance Program (LIHDWWEAP?*) has the feel of a last-minute provision tossed into the package. The $638M program got just 1.5 pages in Section 533 of the mammoth 5,593 page law, with little guidance on how the program will be structured or administered. Meanwhile, a new presidential administration has just taken office and is still trying to get organized. Advocates, regulators, and water sector managers are puzzled about how to manage the program and what it might mean for future federal forays into water affordability; I’ve been fielding lots of calls and messages on this issue over the past month.

Frequent readers also know that there are good reasons to be sober in our expectations of how much means-tested assistance can really help water affordability. But means-tested assistance is what Congress has cooking, and it's a useful part of an affordability strategy. So here I’ll do my best to summarize what we know about LIHDWWEAP (I’m going to call it LĬD-wēp , or LID-weep) administration and offer some ideas to the people charged with putting it into action.

LĬD-wēp

Section 533 doesn’t say much about how LIHDWWEAP is supposed to work, but here are the basics. The program is to be administered by the Department of Health and Human Services (HHS), not EPA. That’s important because HHS already runs LIHEAP, the federal Low-Income Home Energy Assistance Program; Congress probably figures water utilities are a lot like energy utilities.**

These folks don’t do much with water & sewer systems… yet

HHS will not administer LIHDWWEAP directly. Rather, the program is structured as a set of grants to state and tribal governments. HHS is supposed to allot grants to each state and tribe based on the size of their populations under 150% of federal poverty levels and the share of the population that spends more than 30% of monthly income on housing. HHS hasn’t yet set the allotment formula, and it’s going to take at least several months of rulemaking before a dime gets to the states.

In turn, state governments will send funds to water utilities. Each state will have its own method for allocating funds to utilities and rules for the use of those funds. Section 533 says only that LIHDWWEAP is supposed to reduce water bill debt or service rates for “low-income households, particularly those with the lowest incomes, that pay a high proportion of household income for drinking water and wastewater services.” The law does not define “low-income” or “high proportion.” Section 533 directs HHS to use existing administrative procedures to the extent possible, but ultimately it will be up to water and sewer utilities to get the LIHDWWEAP money to the people who need it.

Implementing LIHDWWEAP

Congress just told HHS, hundreds of state and tribal agencies, and tens of thousands of utilities to provide means-tested assistance for low-income water/sewer customers. To be blunt, nobody really knows how to do that. Many utilities currently provide means-tested assistance or rate reduction programs, but to my knowledge there has never been a systematic study of U.S. water assistance program design, implementation or impact. We’re more or less flying blind here.

All I can say definitively about LIHDWWEAP implementation is:

¯\_(ツ)_/¯

Having said that, I’ve worked with lots of utilities, I've seen a lot of assistance programs, and I know some things about water rates and public management. So with all appropriate caveats, here are some thoughts on how to implement the version of LIHDWWEAP that Congress just created. In crafting these educated guesses, I assume that state agencies and utility managers want to help low-income people as quickly and effectively as possible, and that strategic positioning for future LIHDWWEAP is a secondary concern.

Counsel for state administrators

Once HHS determines your state’s LIHDWWEAP allotment:

  1. Use a simple formula to allocate funds. Don’t bother trying to gather data on arrears or water debt and run sophisticated analyses to see which utilities “need” the most funding. That will take time and require data that lots of utilities can’t get readily, and funding is pretty meager anyway (it works out to about $10 for every person in the U.S. with income under 150% of poverty) so complexity would just slow things down. Just distribute funds to utilities as a function of service population and poverty rate. Where water and sewer services are offered by different organizations, just split them in half. No need for fancy allocation methods.

  2. Build a two-tiered system. Your state has hundreds of water and sewer utilities. A few of them are large, serving tens of thousands to maybe more than a million people. Those big utilities are professionalized organizations with hundreds to thousands of employees. But most of your state’s water and sewer utilities are very small, serving populations of less than 10,000 and employing fewer than a dozen people—maybe just one or two part-timers. Set up separate LIHDWWEAP implementation processes for big and small systems. The right size cut-off will vary from state to state, but I’d suggest a threshold of something like 50,000 in service population.

  3. Give big systems funds and get out of the way. Those large utilities probably have pretty good billing and accounting systems to track water/sewer debt, and they have a good idea how many customers may need assistance—lots of big utilities already have means-tested assistance, debt forgiveness, or rates in place. Send these big utilities their share of the LIHDWWEAP funds and let them use existing programs or create locally-tailored systems to get funds to customers who need it. Ask for a simple one-page report at the end of the year to tell you how they spent the money and how much they have left.

  4. Set up third-party administration for small systems. Your state’s small utilities already have a lot on their plates. Many have antiquated billing systems—maybe even paper ledgers—and poor or hard-to-manage account records. Most won’t have the organizational bandwidth to do the accounting, auditing, and reporting for LIHDWWEAP, let alone the capacity to handle means-testing. Even moderately-sized utilities (serving say 25,000) will not want to invest in administration of a LIHDWWEAP program that isn’t very generous. Instead, allocate funds to small systems, and then set up boilerplate memoranda of understanding (MOUs) that pool the small systems’ funds into funds to be administered by regional or county-level social service agencies that already manage means-tested programs. Allow funds to be distributed to any income-qualified resident of the small systems’ service areas. Don’t bother tying back benefits to specific bills or water debts.

Counsel for utilities

Once your state administrator allocates your LIHDWWEAP funds, they will probably come with some rules. Everything that follows carries the caveat: “…if state and federal regulations allow.”

Paperwork a'comin! Let's try to keep it simple.

  1. Use existing programs. If you already have a means-tested assistance or discount program that seems to work, just funnel the LIHDWWEAP funds into it and expand outreach and eligibility as much possible. In many cases the new program won't give very much money. Many existing programs target specific segments of the population (e.g., elderly, disabled); these should be expanded to include any income-qualified customers.
  2. Focus on shut-offs. If you don’t already have a means-tested assistance/discount program or your program doesn’t work very well, use LIHDWWEAP funds to manage (preferably eliminate) shut-offs for nonpayment. Setting up, publicizing, and administering an effective assistance program takes a lot of time. To help people right away, stick the LIHDWWEAP money into a dedicated account. When a residential customer account falls into serious delinquency and is at risk of shutoff, contact the customer and ask if (s)he qualifies for assistance by whatever guidelines are adopted locally. Make that process as easy as possible. If a customer slated for shut-off qualifies, just use the LIHDWWEAP funds to pay off the debt and maintain service. You can do this literally up to the moment when the utility crew shows up to shut the water off (but preferably earlier). Once a permanent assistance/discount program is up and running, any remaining LIHDWWEAP funds can supplement it.
  3. Work together. All of this stuff is easier to manage in larger organizations. If your utility doesn’t have the organizational capacity to take on LIHDWWEAP administration, cooperate with other utilities and/or organizations in your area to save on administrative costs while helping your customers in need.

Portentous LIHDWWEAP

LIHDWWEAP might have been a congressional afterthought jammed into an overstuffed emergency relief package, but it portends more federal water assistance to come. LIHEAP-style assistance seems to be the congressional Democrats’ preferred instrument for addressing water affordability. Congress and HHS will be watching as states and utilities grope toward administrative processes. Next time Congress takes up LIHDWWEAP, they'll probably have more than 300 words to say about how to carry it out




*Y’all Capitol Hill people really need to think through the acronymic implications of the names you stick on programs.

**They’re not, really.

We badly need such a study, but serious evaluation (i.e., rigorous analysis, not cherry-picked case studies) won’t be easy or cheap. Got a couple hundred grand to sponsor such a study? HMU!

Echoes of Vizzini

No, EPA did not propose affordability guidelines for municipal utilities

Affordability!

Late last week the EPA published in the Federal Register some proposed new guidelines for evaluating sewer utilities’ financial strength. In press releases and public comments, water sector and local government organizations lauded the proposal as an important action on “affordability,” and a few news outlets dutifully reported on the EPA’s new water "affordability" guidance. Likely most people would think that means lower water bills for low-income households.

But the EPA’s proposed guidelines have little to do with affordability as most of us think about that word—the guidelines are not about ensuring that low-income Americans can pay for water. Rather, the proposal is about whether communities have sufficient resources to pay for water pollution controls required under federal law. In practical terms, the new guidelines are about whether sewer utilities have to comply with the Clean Water Act in a timely manner.

Understanding what’s going on here requires understanding a bit about sewers, the Clean Water Act, and why utility managers think about “affordability” differently from the rest of us.  

Clean Water Act and local economics

Municipal sewer systems must meet a variety of pollution control rules under the federal Clean Water Act. Many of these rules require major investments in infrastructure and ongoing operational and maintenance costs. Often these costs can be quite high, especially in older communities that operate combined sewers that suffer significant sewage overflows during rainstorms. Overflows can cause raw sewage to run into rivers, lakes, and coastal waters, with attendant damage to health and environmental quality. The Clean Water Act aims to reduce, mitigate, and eventually eliminate such pollution. Recognizing that pollution controls are expensive, Congress built into the law provisions that a allow sewer utility to delay compliance with water pollution controls if compliance would outstrip its “economic capability.”

Yuck.

With few exceptions, sanitary sewer utilities in the U.S. are owned and operated by local governments. In practice, then, when sewer systems face significant Clean Water Act compliance costs, local officials sometimes try to negotiate delayed compliance with EPA or state environmental regulators by arguing that their communities have insufficient economic resources to comply with the law.

To evaluate these claims, EPA conducts a Financial Capability Assessment (FCA)—an appraisal of water pollution control costs relative to a community’s overall economic resources. This appraisal is supposed to be holistic, capturing a range of economic indicators. Since 1997, a key element of EPA’s assessment methodology has been the residential indicator, which is intended to reflect the impact of sewer system costs on rate payers. The residential indicator is the average sewer bill as a percentage of the community’s median household income (%MHI). When that value exceeds 2.0%, EPA considers pollution control costs to be “high” and potentially eligible for delayed compliance.

This approach isn’t great, but it’s not a crazy way to evaluate community-level financial capability.* Still, the residential indicator has been much-maligned in the water sector and was the subject of a comprehensive critique from the National Academy of Public Administration three years ago. Last year AWWA, WEF, and NACWA joined forces to advance a new analytical framework to guide FCA instead of %MHI. The AWWA/WEF/NACWA methodology incorporated local poverty levels and sought to evaluate Clean Water Act compliance costs in terms of their potential impacts on household sewer bills at the 20th percentile income.

What EPA is proposing

Still with me? Great. The proposal that EPA released last week is a revision to the FCA guidelines with two broad alternatives. Much of the proposal aligns wiht the methodology favored by AWWA/WEF/NACWA. Under the Alternative 1, EPA retains the traditional %MHI residential indicator and the suite of economic indicators in its existing methodology, but would add assessments of local poverty prevalence and potential rate impacts on 20th percentile income households. Alternative 2 would allow utilities to use a “dynamic financial and rate model” to evaluate the impacts of Clean Water Act compliance costs on customers.** At the heart of the new proposal are a pair of tables that integrate the old and new methodologies:

Alphabet soup

More alphabet soup

Recognizing the underlying distribution of economic conditions by accounting for poverty and 20th percentile incomes is an important advancement. Under either alternative, these guidelines are marked improvements on the status quo in that they provide a more complete, nuanced economic picture of the communities that sewer utilities serve.

Still, it’s important to keep the purpose of all this analysis in mind: under either alternative, the FCA would inform EPA’s negotiations with sewer utilities over compliance schedules. The point of these guidelines is to determine whether and how much sewer utilities ought to delay compliance with the Clean Water Act. Compared with current practices, the proposed guidelines are more flexible and could in some instances lead to more permissive regulation.

Financial Capability ≠ Affordability

EPA did not propose guidelines on affordability for low-income water or sewer customers. Under the proposal, EPA could consider low-income customer assistance programs (CAPs) as part of its overall assessment, but nothing in the proposed guidelines requires or even encourages CAPs. The proposed guidelines would not oblige utilities to structure rates in ways that constrain prices for conservative or low-income customers. Indeed, a utility that was looking for ways to delay investments would actually have an incentive to set more regressive prices: high fixed charges and declining block rates would make FCA metrics look worse, and so help justify compliance control delays.

So despite the rhetoric in headlines and press releases, these guidelines really aren’t about affordability in the way that most of us understand the term. Sure, delayed Clean Water Act compliance will reduce a sewer utility’s revenue needs. But EPA doesn’t regulate rates under the Clean Water Act, and so there’s no guarantee that financial savings from Clean Water Act noncompliance will accrue to low-income customers. In short, these guidelines are not about low-income affordability, they’re about utility finances and water pollution.

Don’t blame EPA for this confusion—they’ve been scrupulously clear and consistent that their guidelines are about financial capability. Regrettably, the industry press releases and news stories have been waving an affordability banner where it doesn’t quite belong.

Can communities afford clean water?

All this confusion over terminology invites reflection on what affordability really means. When municipal sewer utility leaders declare that they can’t “afford” to comply with the Clean Water Act, they’re making a political judgment that spending on other things or keeping taxes and service rates low is preferable to following water pollution rules. That is the prerogative of local policymakers. Communities need to pay for many important things, and clean water is just one of them. The democratic process is meant to help us sort out our collective priorities.

That’s why there’s more at stake here than pedantry. In expanding the meaning of “financial capability” to recognize the distribution of incomes in communities, these guidelines invite us to think about the distribution of environmental conditions in the same communities. The proposed guidelines don’t contemplate whether foregoing water pollution control in the name of “affordability” really helps or hurts low-income households. Do working class folks benefit when a city has low utility bills, but faces frequent and ongoing sewer overflows? Who suffers when raw sewage flows into rivers, lakes, and harbors because utilities can’t “afford” Clean Water Act compliance?

Using the right words compels us to confront these uncomfortable questions, and focuses our attention to what FCA guidelines mean where the sewage meets the street.



*%MHI is, however, terrible, horrible, no-good, very bad way to measure low-income household affordability.

**This alternative is going make rate consultants happy.