California is in the middle of a drought. In the Bay Area, that has meant day after day of glorious, uncharacteristically sunny winter weather. But, I am haunted by media images of dry creek beds and by my own mental images of driving by the Rim Fire near Yosemite last summer. Who knows what this summer will bring.
The drumbeat of media coverage on the drought had led me to think harder about the water-energy nexus. At a high level, that phrase encapsulates two profound facts: energy production is extremely water intensive and water provision is extremely energy intensive. (At this point, we can’t really say “water production,” but as we add more desalination capacity, production becomes more apt.)
I’ll focus on the second of those two facts, but this article on the water used for fracking relates to the first.
Providing Water to Homes, Businesses and Farms Requires A LOT of Energy
The energy intensity of water delivery hit home to me several years ago when my husband, who works for an electricity generator, spent the day at a California Public Utilities Commission workshop on low-flow toilets. Why would an electric generator care about toilets?! It turns out that pumping, conveying, heating, and treating water are all highly energy intensive.
In fact, several years ago, the California Energy Commission calculated that 19 percent of the state’s electricity and nearly 30 percent of its natural gas consumption went to moving, heating and treating water.
I’ve delved into these calculations, and not all of the energy attributed to water is in my view actually driven by decisions that we would normally think of as water-usage choices. For instance, the calculations include things like heating water for sterilization in food processing. I can imagine a sterilization technique that didn’t use water but still used energy, and sterilization is ultimately driven by decisions about processed food consumption.
A recent paper from the University of Texas similarly calculates the share of U.S. energy related to water. The authors distinguish between “Direct Steam Uses,” which includes things like sterilization and “Direct Water Services,” which are driven by what I think of as water-based decisions. The authors estimates that the two categories together account for 13 percent of the nation’s energy and Direct Water Services account for 8.5 percent of the nation’s energy.
The energy cost of H2O also depends on where you live. Californians use more energy-intensive water because we use more groundwater and less surface water, and we move it over longer distances. My water provider, East Bay Municipal Utilities District, charges an, “Elevation Surcharge,” which they describe as, “based on the energy costs of pumping water to higher elevations.” For households in the hills above 600 feet, the surcharge adds more than $1 per hundred cubic feet to a base price of roughly $2.50 per hundred cubic feet. Not all utilities have this adder.
As an energy economist, I hear a lot about positive – in the sense of reinforcing – feedback loops that could result from climate change. Rising temperatures, for example, will require more electricity to power air conditioners, and, right now, electricity production is the country’s main source of greenhouse gas emissions. A drier California climate might be an example of a negative feedback: more droughts will force us to rationalize the ways we use water—and save energy, in the process.
But, how do we rationalize our water use? We should start by rationalizing water pricing. I know this might sound like the knee-jerk economist answer, but the water world has many examples that violate simple Econ-101 principles. In a nutshell, water is a scarce resource, and we treat it as though the basic input were free. In Los Angeles, for instance, the Department of Water and Power subsidizes houses on bigger lots by giving them more cheap water. Water usage in the agriculture sector, which accounts for 80% of California’s total water consumption, is a whole mess in and of itself, symbolized in my mind by the rice paddies in the Central Valley.
The water economist, David Zetland, has made scarcity pricing for water his battle cry and has written a book on Living with Water Scarcity. As Timothy Egan in the New York Times has said, we cannot “out-engineer a fevered planet.” But, we can move towards rational pricing policies that help us make better decisions about our planet’s scarce resources.
Catherine Wolfram is the Cora Jane Flood Professor of Business Administration at the Haas School of Business, Co-Director of the Energy Institute at Haas, and a Faculty Director of The E2e Project. Her research analyzes the impact of environmental regulation on energy markets and the effects of electricity industry privatization and restructuring around the world. She is currently implementing several randomized control trials to evaluate energy efficiency programs.