Tim Shah

December 11th, 2010

PLAN 548T- DECISION INSIGHTS FOR PLANNING AND POLICY ANALYSIS

ASSIGNMENT 3
A Policy Analysis of Guelph’s Water Management problem
Prepared for: Professor Hadi Dowlatabadi

Introduction

This paper deals with water management challenges and policy implications facing the City of
Guelph located in Southern Ontario. In my role as a policy analyst for the city, I have outlined a
comprehensive process to deal with the challenges and opportunities over the next few years
including identifying fundamental objectives and performance measures to monitor these
objectives. Four alternatives were generated and compared using a weighted decision criteria;
this helped determine the importance of the relative alternatives. Finally, I conclude with a
tradeoffs section which allows for the policy analyst to assess the relative merits of different
alternatives.

Background

I am a policy analyst for the City of Guelph, Ontario. Our city has a population of 115,000
people and we have experienced a number of water droughts over the past 6 months.
Hydrologists are predicting more severe water droughts in the coming two years and have
cautioned the city about the need to conserve its groundwater aquifer. The city draws 90 percent
of its water from the local aquifer and 10 percent is imported from neighbouring municipalities.
In spite of a water metering program, the average daily water demand in the residential sector
has been increasing since 2006.

With increased population growth, more single-family dwellings have been constructed. The
single-family dwellings generally have larger lots. Water department statistics indicate that there
has been an increase in water demand from the household residential sector. This has placed
more pressure on the city’s aquifer. In 2005, the city decided to construct an additional water
reservoir to increase water supply to meet the growing demand for water resources. Academics
at the University of Guelph recently wrote in to City Council arguing that funding should have
been allocated to demand-side management programs that encourage direct water conservation. I
have learned that among many of the issues that have led to this major challenge, the failure to
curb peak demand through appropriate prices has directly led into pressures to overbuild water
supply networks.

As an analyst, I would like to find a sustainable policy solution to Guelph’s water challenges.
The outcome of this decision can be significant in terms of water conservation implications for
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the city. Therefore, it is really important that I carefully explore my options. I have to make a
water policy recommendation to City Council based on this analysis. The recommendation is
targeted toward the residential sector for two reasons. 1) They are the largest consumers of water
among water users. 2) With a creative approach, residents can be engaged in water management
and learn how their impact on the aquifer can be minimized. I have learned from hydrologists
that if current consumption trends continue, the aquifer can be severely depleted within 5 years.
This means that water tables would drop making withdrawals more difficult and expensive.
Thus, I must set out my objectives and evaluate a list of alternatives. The alternative will be
selected based on how well it meets the objectives and whether it can be accomplished within a
five-year time frame.

Table 1. Residential Water Consumption from 2006 to 2009

Residential 2006 Population 2007 Population 2008 Population 2009 Population
Sector (water 100,000 104,000 110,000 115,000
consumption)
Single Family 300 litres per 310 litres per 320 litres per 328 litres per
Residential capita per day capita per day capita per day capita per day

Total for year 30,000,000 litres 32,240,000 litres 35,200,000 litres 37,720,000 litres
(population x
per capita water
consumption
Note: Canada and the United States use the most water per capita than any other country in the world. Indeed,
citizens use 343 litres and 382 litres per day, respectively, nearly 1.5 times more than the EU and at least 20 times
more than much of the developing world (Ferguson-Martin & Shah, 2010). 300 litres per capita per day is
considered very high based on the literature reviewed (Brandes et al. 2006).

The table above indicates that the city is growing mostly in the form of single family residential
housing through sub-division construction. New single family homes are larger suburban
developments with large gardens/pools. This rate of increase in the per capita water use can be
indicative of a change in use patterns (or leaks). Hydrologists have explained to me that new
single family home development also increase impervious surface cover (roads, paved surfaces
etc) which reduces the amount of water that percolates into groundwater.1

1
In the hydrologic cycle, groundwater moves downward through the soil by percolation and then toward a stream
channel or large body of water as seepage. The water table separates the zone of saturation from the zone of aeration
(Environment Canada, 2010).

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Fundamental Objectives

I have identified the problem and have outlined the context for the decision to be made. Next, I
will outline my fundamental objectives. Using fundamental objectives are important for
evaluating and comparing alternatives (Hammond et al. 2002).

1) “Minimize water demand on the aquifer”

The means to achieve this objective include promoting water conservation in household
water activities and highlighting the vulnerability of the city’s aquifer to residential water
users.

2) “Engage society in the water conservation process”

The means to achieve this objective include providing information and resources to
residents about water resources. In addition, encouraging residents to be active water
stewards and embracing their ideas and suggestions with regards to water conservation
would also help to achieve this objective.

3) “Maximize economic efficiency”

The means to achieve this objective include promoting efficient use of water in
households, minimizing leaks in water infrastructure and strengthening ties with
businesses which provide water efficient technology. The water efficient technology
should be available to all residents at an affordable price.

4) “Promote and maintain a good quality of life”

The means to achieve this objective include promoting a culture of conservation and
strengthening community cohesion through an environment of water stewardship.

Performance measures to achieve objectives

I have identified four relevant strategies to achieve the objectives as outlined below. These
strategies will be evaluated over a 5 year time period.

1) Minimize water demand on the aquifer

 Water usage drops from 300 to 150 litres per capita/day2
 Imported water rate drops from 10 to 5 percent

2
A Water Conservation Study in the City of Guelph identified how full participation in water conservation programs
can reduce residential single family demand from 230 litres per capita per day (lcpd) to 153 lcpd. Thus, I am basing
the water usage reduction target on the study. However, I am slightly more ambitious.
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2) Engage society in water conservation process
 Administer survey before the policy decision is made to solicit feedback from the
public about their involvement in the process
 Increase the participation rates in workshops, community activities and city
events around water awareness
 Recruit David Suzuki to Guelph to scare the residents about dwindling water
resources and why conservation is important for future generations

3) Maximize economic efficiency

 Water department expenditures on water treatment and delivery drop 50%
 Monitoring and evaluation plan shows a five percent decrease per year in costs
from 2010-2015 associated with water savings
 Households spend 10% less on their water bills due to increased conservation

4) Promote and maintain a good quality of life for all residents of Guelph
 Residents self-report that they are satisfied with their achievement in water
reductions
 All residents (low-income to higher income) become more active water stewards
through promoting conservation in the city
 The promotion of water conservation leads to peer pressure to conserve and more
awareness about the impact residents place on the aquifer

Alternatives

This section will feature four alternatives that I have come up with. The status quo is not an
option in this decision problem given the urgency of the situation; an alternative must be pursued
to address the growing concerns of water over-consumption in the City of Guelph.

Alternative 1: Provide incentives for water efficient technology

Introduce a water savings program in the city. Outdoor water activities such as lawn watering
and car washing consume lots of water. Thus, the city can provide economic incentives for
retrofitting old houses with xeriscaping3. In addition, this program would provide incentives for
newer and efficient dishwashers, front-loading washing machines along with grey water
recycling (rainwater harvesting systems). While conventional toilets (13-19 litres per flush) use a
3
Xeriscaping, a trademark term used to describe a form of dry landscaping, is a water conservation option that looks
to the sky for its water source. While most outdoor demand management measures seek to improve irrigation
efficiency, Xeriscaping actually conserves water by landscaping with drought-resistant plants to reduce water use
and loss to evaporation and run-off (Brandes et al. 2006).

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lot of water, they are more of an inconvenience to replace in older homes. Assuming Guelph has
water efficiency requirements for new housing developments then newer homes should have
low-flush toilets and low-flow showerheads. Thus, the incentive program will not target low-
flush toilets and low-flow showerheads.

This alternative can be attractive economically to residents because of the incentives and
discounts; residents can shift their daily water usage activities to a more sustainable fashion. This
approach would seek cooperation from the business community to ensure that they sell the
necessary products. Also, they might be able to collaborate with the city in the incentive and
discount program and be recognized for responsible stewardship practices.

Alternative 2: Re-configure water pricing

Currently, residents pay based on how much they consume. This alternative would adjust the
water metering program to an inclining block rate (IBR) structure. Residents will be given a
certain block per day (let’s say 200 litres per person) at a set price and pay a much higher price
for each 100 litres after that. In essence, the price increases significantly as the volume consumed
increases. The water meter is already installed in the household, so installation costs are minimal.

Rationale and potential impact: IBR reduces both average and peak demand by providing
increasing incentive to reduce waste (Brandes et al. 2006).

This approach may discourage over-consumption and inform residents about the merits of
conservation. Those who continue to use water profligately (water hogs) will provide more
revenue for the water department which can be used to create an infrastructure leak index – the
index can help identify leaks in water infrastructure, for example. By identifying leaks, less
water will be lost in the system. Leaks represent a waste of energy and costs of water purification
making water distribution even more expensive. This alternative may send better price signals to
residents about conservation practices and remind them about the vulnerability of the city’s
aquifer. Ultimately, raising the price of water signals its increased scarcity and value and
provides an incentive for households to reduce their low valued uses of water such as car
washing and lawn watering.

Figure 1. Inclining Block Rate Structure (Water World:

http://images.pennnet.com/articles/ww/thm/th_survey-04.gif)

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Alternative 3: Carry out public education program

As a policy analyst, I can allot a certain amount of funding into a city-wide public education
program. Such a program would be focused on water conservation and may instil a culture of
stewardship. These programs could be funded by the city and delivered at community centres,
city hall and local schools. Students from the University of Guelph along with professionals
working with water resources will assist in the programs and workshops to provide more insights
about hydrology, the risks of aquifer depletion and the impacts residents have on the water
system.

Rationale: Education can help inform the public’s understanding of water conservation and help
influence better behaviour.

This may be an attractive option for residents as they can learn more about their water system
and how to incorporate water conservation in daily life. This alternative may improve quality of
life as a whole for the citizens of Guelph. It can bring together a number of individuals in a
collaborative fashion to address the need for water conservation.

As part of the public education program there can be a peer competition for water conservation
which can be a powerful social tool. If metering information for peer groups were shown on the
residents’ water bill they would be able to see if they are a water hog or a water miser. The city
could have an annual draw to give a special prize to water misers – in order to avoid them using
the information to increase their consumption. Such a prize could be far less expensive than the
cost of infrastructure expansion.

Alternative 4: Implement by-laws attacking developers

With the continuation of more sub-division growth, I am in a position to institute by-laws that
put major responsibility on developers to consider best practices for water conservation. The first
by-law would require all new developers to construct xeriscaping gardening for the lawns of the
new houses built. To ensure that rainwater still percolates the groundwater aquifer, developers
will be required to create a sufficient amount of green space4 (size of green space depends on the
size of the development) so that the aquifer continues to be recharged.

4
The US EPA argues that a good planning solution to new residential development is to preserve large, continuous
areas of absorbent open space for groundwater recharging (EPA, 2006).

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Water supply and cost is equally important in this analysis as the demand side. In many cities
around the world, a certain percentage of water pumped into the distribution system is lost to
leaks (Zetland, 2010). One of the reasons for this is the inefficiency of low-density developments
– such as sub-divisions -- which require longer water transmission and distribution mains5. A
house on a smaller lot is closer to the transmission main and thus requires a shorter distribution
main (EPA, 2006). Neighbourhoods with smaller lots will have more houses per block of
transmission main, so the cost of that main will be less per house than in neighbourhoods with
larger lots. Therefore, higher density developments can reduce both cost of water distribution
and the loss of water in pipes due to leaks. With this information, I can institute a by-law that
requires developers to achieve a certain density (number of homes on a parcel of land).

Simple Consequences Table

Below is a simple consequences table (an objectives by alternatives matrix). The alternatives will
be assessed based on how well they meet the given objective. In addition, each alternative will be
assigned a category based on the formulated index from lowest to highest (bad, reasonable, good,
very good and excellent).

Table 2. Simple consequences table Alternatives

Objectives Main Criteria (A) Incentive (B) IBR (C) Public (D) By-laws for
program water pricing Education developers
Minimize Water usage drops Good Very good Good- Excellent
Water in aggregate
Demand
Maximize Households and Good Excellent Reasonable Very good
economic water dept save
efficiency capital on
waterworks
Engage Collective Excellent Reasonable Very good Bad
Society in participation in
WC water stewardship
Process practices
Promote Residents report Very good Reasonable Very good Reasonable
and satisfaction with
Maintain new water policy
good direction
quality of
life

Going through the process of a simple consequences table is useful for visualizing the objectives
and alternatives. As I have now created the criteria for each alternative, I now turn to the
5
Dispersed development require longer water main distribution systems which leak more than shorter ones (EPA,
2006). Systems in low density areas must use higher pressure to push water through longer mains- this puts more
pressures on the water infrastructure over time and is more expensive for the water provider (EPA, 2006).

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weighted decision criteria table (see page 8) which I use to evaluate and prioritize a list of
options. In the table, each objective is given a weighting out of 100 based on how well it
performs in solving this policy problem. Each alternative will be scored out of 10; high is good,
low is bad. The score for each alternative will be based on how well it meets the objective. The
objectives are fairly diverse and it is vital to remember that the city’s aquifer has been identified
as the critical issue. Thus, with the main problem in mind, how well can the alternatives alleviate
and or remedy this critical issue?

Table 3. Weighted Decision Table

Alternatives
Objectives Weighting (A) (B) (C) (D) Total
Factor
Minimize Water 50% 7 9 4 10 30
Demand (x50%) (x 50%) (x 50%) (x 50%)
3.5 4.5 2 5
Maximize 30% 5 9 6 8 28
economic (x30%) (x30%) (x30%) (x30%)
efficiency 1.5 2.7 1.8 2.4

Engage Society in 10% 9 5 10 3 27

WC Process (x10%) (x10%) (x10%) (x10%)
0.9 0.5 1 0.3
Promote and 10% 9 3 9 5 26
Maintain good (x10%) (x10%) (x10%) (x10%)
quality of life 0.9 0.3 0.9 0.5
Total 100% 6.8 8 5.7 8.2

Discussion of Results

Each of the objectives in table 3 received a weighting factor out of 100. Minimize water demand was
given the most weight at 50%. This is justified by the pressing nature of the depleting aquifer. All four
objectives are critical in this analysis, however, minimizing the immediate demand is judged to be the
most significant. The weighted decision table indicates that alternatives B and D scored the highest;
alternative D scored higher by 0.02 percent. Alternative B is the inclining block rate water pricing
option and alternative D is the set of by-laws attacking developers. Both yielded considerably higher
values than alternatives A and C. Alternative A (incentives for water efficient technology) scored very
closely with alternative B but did not perform as well for the “minimize water demand” and
“maximize economic efficiency” objectives. Alterative C (public education) scored the lowest. While

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public education is critical for any societal issue, it might be most appropriate to use public education
to complement the recommended alternative instead of making it a sole alternative for this problem.

Ultimately, alternative D scored the highest (8.2) because it performed well in the higher weighted
objectives. While regulation and by-laws should always come secondary to policy tools and incentives
(see Carter & Fowler, 2008), it could prove to be the most effective in alleviating the water shortage
problem in the City of Guelph. While alternative D scored the highest in this analysis, I am not
prepared to pursue this alternative. First, I will do an analysis of tradeoffs then come to a final
recommendation.

Analysis of Tradeoffs

Alternative D and alternative B are similar in the scoring, but in terms of maximizing economic
efficiency, alternative B can be better at saving money for all households and the water department.
Creating by-laws can be an expensive and time-consuming process; administration and processing fees
can add up and require a lot of money. If designed properly, the IBR water pricing option can account
for social equity which is part of the economic efficiency objective I have outlined. Some of the excess
revenue from the IBR structure can be used to subsidize water consumption by low income users, for
example. In addition, it is more flexible and less rigid than alternative D and can send better signals
(both in price and conservation) to residents thereby potentially fostering a culture of water
stewardship.

Alternative A (incentives for water efficient technology) did not score as high as alternatives B and D
for the “minimizing water demand” objective. However, it performed well in the other objectives of
the matrix. One major problem however, is the tremendous amount of uncertainty around alternative
A. Incentives for water efficient technology can be very effective at engaging households in the
residential sector, as people usually respond well to incentives that will save them money. Moreover, if
rebates are made available for residents, they may start understanding why it is critical to conserve
water and to think about the impact on future generations. However, this alternative scored 5 out of 10
for “maximize economic efficiency” because it can be very expensive for the city to administer. While
some residents might recognize the sense of urgency around water conservation, others can very well
continue to live their traditional lifestyles consuming over 300 litres of water per day. But, as
mentioned, incentives for water efficient technology might be available in the future when the water
department raises enough revenue to subsidize and provide rebates.

After a comprehensive evaluation of my alternatives, and given my set of objectives, I must make a
decision between alternative B and D. Ultimately, as a policy analyst, I value economic efficiency and
public engagement. While attacking developers with xeriscaping by-laws and density requirements
might be effective, an inclining block rate structure might provide the city with a better idea of the
need to conserve. I am prepared to recommend the IBR water pricing structure as it may be the best
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option to alleviate pressure on the city’s aquifer. The rationale behind my recommendation is that price
can drive efficiency and innovation. Guelph’s capital budget is constrained with a finite amount of
funds available for water infrastructure and service provision. The basic idea behind conservation-
based pricing is that prices should be high enough to promote behavioural change and include the
uptake of new technology (Brandes et al. 2006).

An IBR initiative can be contested socially and politically. However, over time, the inclining block
rate structure can create a market for water efficient technology (alternative A) where residents take
more control and responsibility over their water consumption. Indeed, product designers, inventors and
engineers can bring about water saving appliances and equipment if price signals exist to inform them
of the profit opportunities of doing so (Renzetti, 2009). In the short term, IBR will immediately reduce
water demand thereby meeting the first objective. I know IBR will reduce demand immediately based
on evidence from other Canadian cities (Brandes & Ferguson, 2003).

Perhaps the greatest benefit of an IBR structure is that the revenue collected could be partially used to
provide rebates for all residents wish to purchase water efficient technology. More importantly and
simply based on the urgency of the issue, IBR can result in water use reductions of 10 percent to 40
percent (Brandes et al. 2006). As residents start to pay prices that reflect the water scarcity of the city,
this may lead to an impetus to buy more water conserving technology. Ultimately, this could cut
demand in half and save residents money along with reducing pressure on the aquifer.

Recommendation: My recommendation to the City of Guelph is to pursue alternative B which is the

implementation of an inclining block rate pricing structure.

Conclusion

Water policy and management is difficult under pressure of a depleting aquifer. This comprehensive
process was useful in thinking about the fundamental objectives of the policy decision problem. Using
fundamental objectives, I was able to differentiate between ends and means which illustrated the
process of meeting the fundamental objectives. Thereafter, I set up performance measures which are
critical for understanding how our objectives could be met given the parameters of the situation.
Performance measures in this decision problem were mostly quantitative in that a change in the given
unit (decreased water consumption, for example) would show the policymaker that the objective is
being met.

Generating alternatives is a mentally consuming albeit necessary task. Four alternatives were generated
and compared in the simple consequences table. Using the weighted decision table was valuable in
assigning weights to each of the objectives and scores to the alternatives based on how well they
perform in achieving the objective. Making tradeoffs assisted in this process and allowed the
policymaker to judge the strengths and weaknesses of each alternative. I believe that policymakers
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should utilize this framework when confronted with a difficult decision problem. After all, it may
generate new ideas and information that can lead to action for accomplishing a desired outcome.

References

Brandes, O.M., Ferguson, K. (2003). Flushing the Future? Examining Urban Water Use in
Canada. Polis Project on Ecological Governance, University of Victoria. Retrieved
September 12, 2009 from the World Wide Web:
http://www.polisproject.org/files/flushing.pdf

Brandes, O.M., Maas, T., Reynolds, E. (2006). Thinking Beyond Pipes and Pumps: Top 10 Ways
Communities Can Save Water and Money . Polis Project on Ecological Governance,
University of Victoria. Retrieved October 12, 2010 from the World Wide Web:
www.polisproject.org/PDFs/ThinkingBeyond_eng_lowres.pdf

Carter, T., Fowler, L. (2008). Establishing Green Roof Infrastructure Through Environmental
Policy Instruments. Environmental Management, 42, 151-164.

Chris Ferguson-Martin & Tim Shah. (2010). Ministerial Brief: A Proposed International Convention on
Water. Prepared for ERST-4610H (Global Environmental Policy), Trent University.

Environment Canada. (2010). The Hydrologic Cycle. Retrieved November 28, 2010 from the World
Wide Web:
http://www.ec.gc.ca/eau-water/default.asp?lang=En&n=23CEC266-1

Environmental Protection Agency. (2006). Protecting Water Resources with Higher-Density

Development. United States EPA. Retrieved September 9, 2009 from the
World Wide Web:
http://www.epa.gov/dced/pdf/protect_water_higher_density.pdf

Hammond, S., Keeney R.L., Raiffa, H. (2002). Smart Choices: A Practical Guide to Making
Better Life Decisions. Broadway Books: New York.

McDaniels, T.L., Trousdale, W. (1999). Value-Focused Thinking in a Difficult Context:

Planning Tourism for Guimaras, Philippines. Interfaces, 29, 58-70.

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Renzetti, S. (2009). Wave of the Future: The Case for Smarter Water Policy. C.D. Howe Institute
Commentary. Retrieved October 18, 2010 from the World Wide Web:
http://www.cdhowe.org/pdf/commentary_281.pdf

Zetland, D. (2010). Water Rights and Human Rights: The Poor will not need our charity if we need
their water. UC Berkley’s Department of Agricultural and Resource Economics. Retrieved
March 1, 2010 from the World Wide Web:
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1549570

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