North Carolina does not have adequate water supplies to support anticipated population growth over the next 30 years, the General Assembly’s Environmental Review Commission reports. Lawmakers, academics, and industry leaders are scrambling for solutions. Everyone agrees water is scarce. What they don’t agree on is what to do about the scarcity.

At a water sustainability symposium held at North Carolina State University July 14, environmentalists and leaders in the irrigation, landscaping, and agricultural industries suggested government incentives and mandatory restrictions to get people to save water. Free-market economists counter that prices, rather than government regulations, should determine water use.

Consumers ‘prefer’ restrictions

North Carolinians would rather face mandatory water-use restrictions than pay higher prices, said Barbara Fair, a horticulture professor at N.C. State. She drew those conclusions from a survey conducted by the university’s department of agriculture.

Water customers were asked whether they would prefer a $20 monthly increase in their water bills or outdoor watering restrictions. More than three of five respondents — 62 percent — chose restrictions. From this, Fair concluded, “The vast majority of people do not want to be charged higher prices.”

Fair noted that “watering restrictions did not seem to reduce water use,” but still said restrictions were preferable to price increases.

Rep. Ruth Samuelson, R-Mecklenburg, said the survey results were not surprising. “People tend to think the restrictions are going to hit somebody else,” Samuelson said. Or those surveyed may have been thinking of more innocuous water restrictions “like low-flow shower head and low-flow toilet and other conservation measures, the kind people don’t notice as much,” Samuelson said. “That’s usually where they start — requiring [new] fixtures and retrofits.”

But as North Carolinians experienced during the 2008 drought, watering restrictions can turn into “water police,” issuing fines when people water their lawns or wash their cars. And if conservationists had their way, per-household maximums would be imposed on water users.

‘Cheap water’ won’t last forever

Samuelson said water prices eventually will go up “because that’s just how the market works.”

“Pricing is an issue people don’t want to talk about and don’t want to deal with,” she added. City-run utilities resist raising prices because “politicians don’t want to be responsible for a rate increase on their customers.”

But even if consumers don’t see the high cost of water on their bill, they’re paying for it in taxes. Municipal water departments are supposed to be self-supporting, Samuelson said, but most don’t charge enough to cover their operating costs and end up turning to local and state taxpayers to make up the difference.

Those who use the least water (residential customers) end up subsidizing those who use the most (commercial customers). An increased water rate wouldn’t hurt residential customers very much, Samuelson said. “So your bill goes up from $32 a month to $38 a month, who cares?”

But it would hurt commercial customers. “Think about the cost of running a Coca Cola bottling company,” she said. “If you jack their water price up, that’s going to hit them bad.”

Carrots instead of sticks

Brent Mecham of the Irrigation Association, the trade group for irrigation contractors, spoke at the symposium about “successful incentive programs” municipalities could use to get their customers to conserve water.

Some of the “carrots” Mecham said municipalities should offer include:

• Rebates on equipment such as “smart controllers” (weather-based or soil-moisture-based sprinkler timers), high-efficiency nozzles, micro or “drip” irrigation systems, and rain sensors

• Free audits and inspections of residential properties to ensure sprinkler systems are working correctly. Inspectors should tell customers where water is being wasted and what needs to get fixed and create an irrigation schedule letting them know how many minutes to water each month.

• “Follow-ups” on audits to make sure people are getting their systems repaired. “It’s kind of like a nagging phone call … saying ‘we want you to call a contractor and get them fixed and we want to find out that you’ve done it, because we’re not doing this free service so you can continue to waste water,’” Mecham said.

Charlotte-Mecklenburg Utilities has a similar incentive program up and running, the Liquid Assets Program.

Before a water customer enrolls in the program, he must have the property audited by a licensed irrigation contractor, have a smart irrigation controller and high-efficiency spray heads installed and programmed, and agree to annual inspections to ensure the customer hasn’t “tampered with” the system.

It’s an expensive process, but a rewarding one, said Maeneed Klein, the utility’s water conservation manager and member of the Irrigation Contractors Licensing Board.

In return for letting the city control their sprinkler systems, participants are exempt from watering restrictions during the first three stages of drought. Participants also would be capped at the third highest tier of the city’s four-tier rate structure — a structure that penalizes people with higher rates for using “too much” water.

‘Prices should ration water, not government’

A bill that recently became law in North Carolina directs municipalities to include in their local water plans “a plan for the reduction of long-term per capita demand for potable water.”

The law is a mistake, said Michael Sanera, director of research and local government studies at the John Locke Foundation. The government needs to stop “fixating” on controlling demand, and focus on increasing supply, he said.

And how do you increase the supply of water? “You increase the price,” Sanera said. “How is the supply of any resource increased? Price.”

Conservationists contend water is a finite resource in short supply, but Sanera said that’s a misconception.

“This is a recurring theme with everything — with electricity, with water and everything the environmentalists think we’re running out of — but the whole concept is bogus,” he said. “When the price of a resource goes up, people look for more resources.”

“The reason we don’t desalinize seawater is it costs too much,” Sanera said. But if the price of fresh water got high enough, we would.

The price should reflect the scarcity of the resource, Sanera argued. When water is plentiful, it should be cheap. When it’s scarce, it should cost more.

“Prices should ration water, not government,” agreed Roy Cordato, vice president for research at JLF.

Since government owns the water, government has to set the price, Cordato said, but it doesn’t have to dictate how water can and cannot be used.

“We want to get away from rules and regulations that say during a drought you can’t water your lawn or you can’t wash your car or you can’t power wash your house,” Cordato said. “Just raise the price and let people respond accordingly. Let people cut back in areas of their choice.”

Regulating only outside uses of water “discriminates against people who like dirty bodies, but clean cars,” Cordato said. Or people who’d prefer to water their vegetable garden and cut back on laundry.

A JLF Spotlight report from Cordato goes deeper into the differences between managing demand and increasing supply: Demand Management: Social Engineering By Any Other Name.

Sara Burrows is an associate editor of Carolina Journal.