FEBRUARY 2008 HOT TOPICS

Dealing with Global and Local Water-Related Issues

Water-related issues are literally on everyone's plate at the moment. Water managers have to deal both with growing demands for water in their regions and with the impacts that global climate change will have on end users—businesses and homeowners—who are trying to manage their own water-efficiency issues. A series of recent RAND Corporation studies has focused on helping both water managers and end users manage their water-related issues.

Water Issues Writ Large

Water-resource managers have long strived to meet their system reliability and environmental protection goals despite many uncertainties, but now they also face a new uncertainty: the potential for longer-term and more persistent climate change, which, in coming years, may significantly affect the availability of supply and patterns of water demand. Information about the future effects of climate change is deeply uncertain and likely to remain so for the foreseeable future. This will make it more difficult to plan for upgrades to federal, state, and local water infrastructure, including Gulf States' hurricane protection systems; to resolve long-standing environmental challenges, such as restoring the San Francisco Bay-Delta; and to determine how best to allocate federal dollars for climate change mitigation and water resources research.

As part of a multiyear study on climate-change decisionmaking under uncertainty, RAND researchers have been working with water agencies in California to help them better understand how climate change might affect their systems and what actions, if any, they need to take to address this challenge. In particular, RAND worked with Southern California's Inland Empire Utilities Agency (IEUA) to help it identify vulnerabilities related to climate change in its long-term water plans and to evaluate its most effective options for managing those risks. Researchers deployed new decision-support methods that can help water agencies identify near- and long-term actions that can perform well over a wide range of plausible future conditions.

The study revealed that IEUA's current plan performs well if the region's climate remains unchanged or grows wetter but that the region could suffer significant shortages if the drier-climate projections come to pass. The study identified near-term and long-term actions that IEUA could take to reduce these vulnerabilities. IEUA has already begun to use the results to better understand and counter its future climate risks.

One way that water managers can manage their water resources is to encourage water-efficiency programs among their end users. But evaluating the cost-effectiveness of water-efficiency programs can be difficult, because not all the benefits are easily quantified. A RAND study proposes an exploratory modeling approach to accommodate the significant uncertainty in such estimates, which demonstrates by evaluating the benefits of Denver Water's efficiency programs.

The study shows that if Denver Water evaluates only the short-run avoided costs of the water-efficiency projects in its 10-year conservation plan, it would conclude that many of those projects are not cost-effective. But when long-run avoided costs and environmental and recreational benefits are factored in, all but two Denver Water programs are estimated to be cost-effective. The timing of projected water savings from efficiency programs is also critical. Water savings that are concentrated during the summer months should be valued more highly than more uniform water savings throughout the year, because summertime water savings reduce peak water needs.

Water Issues Writ Small

Water efficiency is also critical to end users, such as commercial buildings, which depend on water both inside (for restrooms and cooling systems) and outside (for landscaping). While building owners have many options to improve water efficiency, analyzing the economics of such investment options can be difficult because of significant uncertainties about such things as the future costs of water.

Owners need an effective process for weighing decisions about whether and how much to invest in new technologies, retrofits, or repairs to improve water efficiency. RAND researchers developed an analytical framework and an easy-to-use spreadsheet-based tool—the Building Water Efficiency Analysis Model, or BEAM—to help building managers, consultants, and efficiency service representatives make sensible water-use efficiency investments and applied it in a case study looking at the potential for improved restroom water efficiency in RAND's new headquarters building in Santa Monica, California.

In the case study—which looked at efficiency packages for the old RAND headquarters and the new building—BEAM yielded very different results for the two buildings. The study shows that BEAM is a convenient analytical framework and tool to help end users consider the potential value of water-efficiency investments under price uncertainty without collecting extensive data or hiring a consultant.

Read the Research Brief: Identifying and Reducing Climate-Change Vulnerabilities in Water-Management Plans

Read the Technical Report: Estimating the Value of Water-Use Efficiency in the Intermountain West

Read the Fact Sheet: A New Tool Can Help Commercial Building Owners Make Better Water-Efficiency Decisions

The RAND Environment, Energy, and Economic Development Program conducts research and analysis on environmental quality and regulation, energy resources and systems, water resources and systems, climate, agriculture, oceans, natural hazards and disasters, and economic development. To access our research, please visit our website at http://www.rand.org/ise/environ/.

The RAND Corporation is a nonprofit research organization providing objective analysis and effective solutions that address the challenges facing the public and private sectors around the world.

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