A reasonable expectation
What low-income households pay for essential service in the United States
Over the past 18 months I’ve been working to develop a valid, generalizable depiction of water and sewer affordability in the United States. There’s currently no nationally-representative dataset on water and sewer rates, so my Texas A&M research assistant Jake Metzler and I painstakingly gathered water and sewer rates data from an original, nationally-representative sample of American water utilities.* We then calculated basic single-family residential water and sewer service prices and developed affordability estimates for each utility using the double-barreled methods I published earlier this year.
All that effort is now ready to bear fruit. An initial working paper reports the full methodology and findings in gory academic detail. If there’s interest here, I’ll share more about our findings here over the next few weeks and months – without the academic gore.
Today I’ll start by sketching the basic picture: how we measured affordability, and how affordable water and sewer services are in the US.
The sample & data
We drew our sample from the EPA’s Safe Drinking Water Information System (SDWIS), which SDWIS contains basic system information for the country’s nearly 50,000 water systems. An overwhelming majority of systems serve fewer than 3,300 people, and so a simple random selection would result in a sample of mostly small systems that collectively serve a tiny minority of the total population. So we stratified the sample—that is, we intentionally “oversampled” different kinds of utilities in order to get a wide variety of systems. Our analysis then adjusted mathematically for the sampling procedure to make sure we get truly representative results.
Single-family residential rates data were collected in the summer of 2017. To call the process laborious is an understatement (I’ll probably blog about that some other time!). For most large and medium-sized utilities, rates data were readily available on websites. When rates were unavailable online—especially common among smaller utilities—we inquired by telephone, repeating calls as necessary. Efforts to collect rates data were abandoned after multiple refusals or non-responses. The final dataset included full water and sewer rates data for 329 utilities. That might not seem like much, but it’s a larger sample than most, it’s representative, and we’re highly confident in the validity of the data.
Basic water & sewer as share of disposable income
We measured affordability in two ways; the first is with the Affordability Ratio (AR).
AR estimates basic water and sewer costs as a share of disposable income, which for present purposes is total income minus essential living costs (taxes, housing, food, health care, and home energy), estimated using Consumer Expenditure Survey data. To focus on low-income households, we measure AR at the 20th-income percentile (AR20). The 20th percentile household typically identifies the lower boundary of the middle class. These working poor households have very limited financial resources, but may not qualify for much public assistance.
Here’s what we found:
AR20 averaged 9.7. In substantive terms, that means that in the average utility, a household at the 20th income percentile must spend about 9.7 percent of its disposable income on basic water and sewer service. But AR20 varies widely, from a low of 0.6 to a high of 35.5. As the figure above indicates, AR20 is less than ten for about two-thirds of systems. A handful are very high—but these values reflect very low 20th percentile incomes as much as they do water/sewer costs.
Basic water & sewer in hours at minimum wage
My other way of measuring affordability is to express basic water/sewer costs in terms of Hours’ Labor at Minimum Wage (HM). This approach may not express affordability quite as accurately, but it’s precise and wonderfully intuitive: it represents the cost of water/sewer service in terms of labor. For those of us who have worked at minimum wage at some point in our lives, it is a powerful way to understand the cost of something.
Here’s affordability in the United States measured as HM:
As you’d expect, the distribution is very similar to AR20, ranging from 1.1 to 25.6. The overall average is 9.5, meaning that in the average utility, paying for basic water and sewer service requires about 9.5 hours of labor at minimum wage.
So is water affordable in America?
When confronting affordability, utility leaders are really asking: how much is it reasonable to expect households of limited means to pay? What economic sacrifices are reasonable?
These are ultimately questions about community values. There is no scientific answer to philosophical questions. No metric can define what is “affordable,” but good measurement can help us think about our values.
In the past I’ve suggested AR20 less than 10% and HM less than 8.0 as rules-of-thumb or point of departure to guide discussion. By these guidelines, 51 percent of the sampled utilities are affordable as measured by AR20 and just 39 percent are affordable according to HM.
We’re now in the process of analyzing the policy, organizational, economic, and demographic correlates of affordability. I’ll be publishing and blogging about what we find over the next several months. For now, I hope these figures provide some food for thought and help frame an agenda for tackling a tough issue.
*Collecting rates data is surprisingly difficult labor-intensive. Jake and I wrote a fun article on that topic–look for it next month.
Another way in which it’s tough to be poor
Drinking water utilities are great, but they aren’t perfect. Sometimes there are problems. Do those problems occur randomly? Or are there observable patterns in the water service problems?
Recently I’ve been posting about some findings from a Texas A&M Institute for Science, Technology & Public Policy (ISTPP) national public opinion survey. The survey’s carefully-designed sample of nearly 2,000 individuals is representative of the US population, and so offers an extraordinary look at public perceptions about water service. Earlier posts reported on attitudinal differences between water professionals and the general public, and on the ways that gender predicts opinion on water issues. I’m continuing to write up interesting findings from the ISTPP survey as time allows.
Today I’m looking at income.
Water service problems
The ISTPP survey asked respondents to say whether they had experienced each of the following problems with their drinking water with a simple yes/no answer:
- The water does not taste good (31.5% yes)
- The water is cloudy or dirty (19.5%)
- Water pressure is low (29.2%)
- The water causes sickness (3.8%)
- Water billing or payment problems (10.2%)
Importantly, this survey captures perceived water service problems, not actual problems—we don’t know that any given respondent actually experienced low water pressure, for example. We only know whether a respondent thinks (s)he experienced a problem. Likewise, we don’t know whether water actually caused sickness, only whether the respondent believes that it did. Fortunately, the large majority of respondents said “no” to all of these.
But the “yes” responses didn’t happen by chance. I fitted logistic regression models to identify correlates of water service experiences using the demographic variables in the ISTPP survey, such as race, ethnicity, age, urban/rural location, region, and income. These models estimate the likelihood of experiencing each of the five service problems.
A troubling pattern
The demographic correlates of water service problems vary, but across all five items, household income was the single strongest and most consistent predictor of water service problems. The graph below shows the likelihood of reporting that water billing problems at various income levels, with all else held equal (vertical spikes represent 95% confidence intervals):
At a $20,000 household income, there is a 13% chance of reporting billing problems. At $50,000, the likelihood is to about 9%; at $100,000 the likelihood drops to about 8%. That all makes some sense; we’d generally expect billing problems to correlate with income.
But the same pattern emerges for other kinds of water service problems, too. Here is the likelihood of reporting that water tastes bad at various income levels, again with other variables held constant:
At a $20,000 household income, there is a 37% chance of reporting bad-tasting tap water. At $50,000, the likelihood is to about 30%; at $100,000 the likelihood drops to about 25%.
Here’s the likelihood of experiencing cloudy or dirty water by household income:
Here’s the likelihood of reporting low water pressure by income:
And finally, here’s the likelihood of reporting that water caused illness by income:
Taken together, this is a sobering picture.* There is a clear relationship between income and the way that Americans experience their drinking water utility service. These results resonate with recent research finding a positive relationship between tap water consumption and income, with attendant implications for public health.
*In a future post I’ll look at race and drinking water experience; the picture won’t be much prettier.
Can declaring a human right to water help address affordability?
Something extraordinary is unfolding in California.
In 2012, to great fanfare, California governor Jerry Brown signed into law Assembly Bill 685, which amended the state’s water code to declare that: “every human being has the right to safe, clean, affordable, and accessible water adequate for human consumption, cooking, and sanitary purposes.” The move was lauded by environmental justice advocates. One United Nations official gushed that AB685 would “…be an inspiration not only for other states within the USA, but equally for many other countries in the world.”
The declaration drew little notice among America’s water utility managers.
Thing is, California isn’t the first state to declare a human right to water in law. Pennsylvania and Massachusetts enshrined a right to water in their state Constitutions—in 1971 and 1972, respectively. Those declarations of rights didn’t translate into safe, clean, and affordable water for all the citizens of those states. I’ve always been a bit uneasy about declarations of a human right to water. That’s not because I have any philosophical objection to the idea, but because declaring rights is a lot easier than making those rights meaningful to real people in real communities.
Game theorists sometimes use “signaling models” to describe political behavior. In these models, people signal their intentions to other people. When those signals are costless to send and non-binding to the sender, the signals are “cheap talk.” When players learn that political words are meaningless, they can fall into a babbling equilibrium, in which political actors simply talk past each other, knowing that no one else’s words mean anything.
The trouble with cheap talk is that it doesn’t advance constructive public policy. Worse yet, it breeds cynicism. Their constitutional right to “pure water” is little solace to the people of rural Pennsylvania whose drinking water has been contaminated by hydrofracking. Utility managers are unlikely to take seriously mere rhetorical flourishes.
Is there any reason to think things will be different in California? Maybe.
Game theory also hints at when political signals augur meaningful policy changes: when political signals are costly to send and are accompanied by binding conditions, they indicate that real changes are likely to follow. That’s why the really exciting development isn’t AB685’s declaration of a human right to water, but rather AB401. This decidedly less sexy 2015 law ordered the California State Water Resources Control Board (SWRCB) to craft a statewide water affordability rate assistance program. That’s a first step—but a meaningful one—on the road to a comprehensive affordability policy. It’s not an affordability solution, but it is a costly signal.
The magic combination of vision with resources recalls the 1972 Clean Water Act, which combined the lofty goal of fishable and swimmable American waters by 1983 with a comprehensive regulatory regime and tens of billions of dollars in federal funding to support construction of wastewater systems. While far from perfect, the Clean Water Act has been enormously successful in cleaning the nation’s waters—because Congressional aspirations were matched with administrative authority and ample funding. The Clean Water Act didn’t emerge fully-formed from Earth Day 1970; it was the culmination of years of development.
“Campaign in poetry, govern in prose.” –Mario Cuomo
The unglamorous task of making AB685’s rhetoric into reality falls to the bureaucracy. The SWRCB has been working to craft policies to assess and address water affordability pursuant to AB401. To that end, tomorrow I’ll be in Sacramento to participate in a SWRCB symposium on water affordability—an early step in the state’s effort to turn the poetry of rights into the prose of guidelines, analysis, rules, regulations, and programs. I’m excited to be a part of this extraordinary effort to put a compelling affordability plan in front of the legislature.
*This post was inspired in part by an interesting twitter exchange with Mike Antos, Laura Feinstein, and Mark Lubell.