"Hit them in the pocketbook!"

(Originally posted on waterefficiency.net)

By Elizabeth Cutright
Editor
Water Efficiency

There’s a long history of attempting to impact human behavior via economic incentives and penalties, although the latter tends to take precedence: We often utilize additional “vice taxes” to commodities and activities deemed unsavory (i.e. levies on alcohol and tobacco purchases). But awarding positive action can be just as effective. Case in point: cap and trade. While cap and trade is getting a lot of buzz as of late—due to the Obama administration’s decision to create a cap and trade system for carbon dioxide—Mark Lange of The Christian Science points out, in an opinion piece, the viability of cap and trade that, in 1989, a cap and trade program for sulfur dioxide (SO2) emissions resulted in a 45% reduction in acid rain within five years.
Which brings us to water conservation. Many water utilities employ rate structures that charge based on water usage (and waste)—a clear example of using an economic penalty to modify behavior. But perhaps there is a better way.…
US Representative Mike Coffman thinks so. On April 2, Coffman introduced the “Water Accountability Tax Efficiency Reinvestment (WATER) Act, which mimics the EPA’s Energy Star Program that offers tax credits for the energy-efficient appliances. Under Coffman’s WATER Act, WaterSense products would be eligible for tax credits of up to 30% (with a $1500 cap). According to EPA estimates, the installation of WaterSense fixtures (including low-flow faucets, showerheads, and toilets) could save a family of four $17,000 gallons a year. The WATER Act (aka HR 1908) now awaits review by the House Committee on Ways and Means.
In a statement to the press, Coffman says “The Water Conservation Act will help meet this demand by helping individuals and businesses conserve water.”
What do you think? Are incentives the way to go when it comes to promoting conscientious water use, or should we combine tiered rate systems with low-flow rebates?
To read Mark Lange’s opinion piece on cap and trade go to: www.csmonitor.com/2009/0413/p09s04-coop.html