This seems a circuitous route to improve costs of provision to me.

Or do you see as a next stage - some kind of ‘tax’ on production by the providing authoritites that is then redistrbuted based on customers actual usage in the area? [although that may be a simplistic representation by me]

Irish households can easily make do with 100 l/p/d. The international average leakage rate may be 33%.

So, households “waste” 50 l/p/d. The county councils “waste” 225 l/p/d.

(25 l/p/d is jointly wasted.)

In that sense, one of the advantages of water charges is that every voter will be alerted to what is really going on, particularly since there are such stark differences between counties.

He is a tad reactionary these days….

Time for Baltimore to “Pull a Vallejo” and Declare Bankruptcy

How rising costs mean bankruptcy for big US cities. Still think this is not a depression?

I agree the govt. proposal is extremely bad. My preference is for the status quo with some supply side action to prevent leakages firstly as I’m not sure how much of an improvement the tax would be. I imagine the revenue from Richards or the Govts taxes will augment the current funding mechanism (the existing payments will just be redirected I suspect) rather than replace it - surely inefficient?

I would like to know what proportion of ‘wastage’ is household and what proportion is leakage before viewing a tax on usage as the solution. I dont see how a tax incentivizes reductions in leakage. I also don’t see how a usage tax leads to more uniform and higher quality water.

A usage tax penalises larger households which is fair if there is a strong link between uasage and costs of provision but unfair otherwise.

Until we know the elasticity of costs of provision with respect to quantity used I would be loath to claim a tax makes a large change to efficiency after costs of metering, billing and collection are included. If it turns out that a usage tax lowers wastage and significantly reduces costs of provision then I stand corrected.

I think Richard addressed your specific query, but his response also indicates a response to your general point. In addition to measuring how much goes into the pipes it is necessary to measure how much is delivered to, and used by, households and businesses. This is a necessary first step to examine gross supply, costs, leakage and deliveries. And this leads to questions about the economic organisation of the industry, regulation and appropriate point-of use charges.

The real choice is between undeniably inefficient provision of (a variable quality) service that imposes a global fiscal burden and a more efficient provision of (a better and more uniform quality) service with cost recovery related to usage.

The Government’s proposal combines current inefficiencies and poor quailty water supplies with economically unjustified point-of-use charges; this is the worst of all possible worlds - and is likely to provoke an entirely predictable public response.

On a general point though, I think that going down the path of user pays for public services is not necessarily a good path and to view this as a method to ensure more efficient provision of such services is unsatisfactory to my mind.

This is a fair point. Without trying to avoid responding to it, my focus, initially, is on the efficient level of costs. This leads to identifying the level of charges that will recover these costs and then the structure of charges. Focusing on the structure of charges risks putting the cart before the horse. The US Federal Energy Regulatory Commission has a time-hallowed 5 step approach to rate (tariff or charge) design that is still relevant. It begins with the cost base and ends in rate design.

Responding to the point you raise is part of this process. It involves the allocation of costs and is an attempt to identify cost responsibility so that costs are allocated appropriately to those who cause them to be incurred.

Inevitably some degree of cross-subsidisation is involved - the alternative is a specific charge for each user. The extent of cross-subsidisation permitted usually involves a judgement about balances/trade-offs among efficiency (in the sense that accurate price signals encourage efficient behaviour), equitability and administrative simplicity.

However, the important thing is to get the economic organisation/regulation right so that efficient levels of cost are achieved. Then we can worry about the level and structure of charges.

I presume you are using “specific taxation” as shorthand for a charging mechanism for delivery of a quantifiable service. And yes, I would hope it would change the debate to focus on institutions and economic organisation. In Ireland the perception is that water, generically, is free, but, as we all know, real costs are incurred in gathering, storing, treating and distributing potable water (and in collecting and treating waste water).

There is a widespread popular view that these costs should be met from the public purse without any limits on personal or household consumption. I believe that the focus should be on ensuring that these costs are at efficient economic levels, rather than promoting the conservation of water. The latter will be an inevitable consequence of the former.

It is highly unlikely that the current disaggregated, local authority-based provision of water (and waste water) services is very efficient. The alternatives seem to be a national body (as suggested in one of the posts above) or a number of water companies covering contiguous local authority areas and subject to independent regulation - which may be able to apply some “yardstick” regulation.

If the debate proceeds in this direction - with a focus on the efficient delivery of the required quality of water - some of the sting may be extracted from the politcial debate.

Take your pick as to which was the most important reason for the abolition of water charges in 1997. Successive Fianna Fail led administrations have gone out of their way to avoid reintroducing water charges ever since, including withstanding the pressure of EU policy in this area. The building boom, though, enabled most of the new housing stock to be fitted with water meters; ‘just in case’, or so one presumes, the day might dawn when there are no options left to fudge or dodge and weave any longer. Estimates of the cost of installing meters in older housing stock have – somehow miraculously in a State where the price of everything else has quadrupled in the meantime – gone down to €150-200m; or between €300m – 400m, or a figure quoted recently in the Irish Examiner of €500m. You can take your pick of those figures too. To me, they indicate that no-one has a clue how much the rollout might actually cost.

A key point, and probably more pressing than any concern for the environment, is the financing of local authorities, who after years of living off the fat of developers’ fees etc. arising from the housing boom, now find themselves very short of income or any means of raising it, except through squeezing more out of domestic households.

In theory and in principle, Richard’s proposal as to how a charge might be levied looks like a good way to proceed. The political hullabaloo – already threatened by Joe Higgins in preparation for his re-entry to the national political scene - that would follow its adoption would be at its most ferocious in urban areas. Labour will not let Higgins, Sinn Fein, or anyone else, seize the high ground on this populist issue; and so won’t be far behind him. Irrespective of the merits of any water charges proposal, politics is likely to triumph over economics.

However, there is an interesting psychology: The sheer act of metering reduces water use.

I also believe that shifting water from general to specific taxation will change the political debate.

The important factors are how elastic is demand to price and how elastic are costs to quantity. If demand is inelastic, the tax has little effect on quantity and so does not lower costs of provision. If we want to reduce waste the tax must be high, if we want to pay for water provision, tax can be lower.

If demand were more elastic but costs inelastic, then increased taxes lowers consumption but does not significantly lower costs of provision. Waste is reduced, but tax must be higher to pay for provision… so maybe flat tax is preferable?

Hence my question regarding the objective.

Personnally I’m not sure demand for water is very elastic to price - If I used only the neccessary amount of water - how much would my water bill be likely to fall by for a month? Thats my maximum saving and in reality the saving will be less. Given the extra hassle involved in conserving I think the saving would need to be quiet large each month to influence my behaviour.

If a large part of the waste is due to leakage, then I’m not sure how the tax will improve this - local authorities won’t be directly competing so where’s the incentive to stop this when the household is paying….?

I used to avoid washing recyclables, assuming that recycling operators were just trying to socialise some of their costs, and that they were better able to avoid wasting water during any washing that was really needed than me. I did always scrape cans and empty cartons and plastic bottles to avoid contaminating paper waste.

Now that, in Dublin at least, they have started taking all clean plastics, I’ve reluctantly changed my mind, and started rinsing.

I’m not sure what the reference to unemptied wine bottles in that RTE article is about. You’re not supposed include glass with general recycling waste in Dublin (at least), and I would have guessed that broken glass would be a bigger problem than wine if people break this rule. But I wouldn’t have thought that a little wine would be a big problem with glass collected through a bring bank that is destined to be melted at a high temperature.

So for starters do we have some solid data behind the numbers? If the €175/person per annum is right then the current water supply budget must be somewhere in the region of €700m/pa. That assumed €700m is currently used to maintain the existing distribution network, build new capacity, process raw ground water into the lovely clean stuff we all get for free and finally it has to be pumped around, only a fraction of our water actually gets to us entirely under the force of gravity after all. The number seems reasonable to me that it would cost around €700m pa but it could easily actually be half that or even double that but I’d say it’s right to within an order of magnitude.

Assuming this is the baseline though and we can reduce consumption to the stated target (150l/day vs 450l/day) then can we realistically expect the costs to drop to €175m/pa? I think that’s extremely wishful thinking but even if it was true what would that mean? Would a water network that had to deliver 1/3 of it’s current capacity cost us only 1/3 what it does today? That is almost certainly not going to be true. At best I think we could hope for an equilibrium level somewhere around a third below where we are today. That’s still a saving of around $175m pa though which is certainly worth chasing.

However to get there we have to incur at least some additional fixed costs - how much will it actually cost to maintain and run a brand new nationwide metering system? The fixed costs of installing the meters will be somewhere in the range of €100-€200 and they will (like any other electrical\mechanical device) require maintenance and replacement. Factor in 10% of that per annum that someone has to pay. Running a nationwide network that can link to 1 million homes will cost a few €uro per household per annum. I’ve no idea how much but I’d be amazed if it could be done for less than €10 and wouldn’t be surprised if it cost €50 per node. Large scale electronic distributed sensor networks in Ireland are generally provided by Cellular providers and a cost of around €50 per embedded node would strike me as cheap but perhaps someone familiar with Eircom\Bord Gais can comment here. That’s another fixed annual cost of between €20 and €60m per annum just to get the meters running. Now add in the cost of administering the system and again I’d be shocked if we could create such a new body that operated on an annual basis for less a good few 10’s of millions. I’d put good money on a bet that said this can’t be done (properly) for without incurring additional costs of somewhere around €100m per annum.

Assuming that all of those things come together we’re talking about a win that is best case going to be in the range of around €75m per annum. And to be honest I don’t think we would see those savings for quite some time - the initial costs are likely to swamp that benefit for a good few years even if everything goes right. And we all know that it wont go right.

Surely it would be simpler to create a national body to manage water resources, give them the entire budget and tell them they have to reduce their costs in real terms by some realistic target - say 2% per annum over the next 10 years, control them by measuring service delivery and quality targets and let them have at it. If (as is claimed) 50-75% of processed water is wasted within the network then we have just as much potential for saving money this way as we do by imposing yet another arcane billing\credit bureaucracy on the population at large.

http://www.rte.ie/news/2009/1012/recycling.html

Cutting water consumption will save money for us the tax payers - it should be implemented correctly. It may rain alot here..but remember we have to treat and clean the water, pump it etc etc…that all costs money - approx 600 per person a year in the, if we get the major leaks fixed and all cut down on needless waste at home, school etc…it’s a good thing. kids in school are saving water, time we adults did the right thing too.

When will this ’shower’ of twits in government excuse the pun ever learn! A flat rate is witless!