Water Consumption Drops – But the Price Rises: How Can That Be?

Abstract

Fred Mercer had recently retired and for his first home project, he purchased two water efficient toilets and two shower heads. He thought he would conserve water for the community and save money at the same time. However, he was disappointed when after six months of use his new toilets and shower heads showed impressive water conservation but hardly any reduction in the water bill.

This case examines the ethics of selling resource efficient toilets and shower heads that do not work as promised; the conventional billing methods for water use through fixed and variable components; financial analysis of the leading water firm and the characteristics of its business model; the drastic need for capital improvements in the water infrastructure along with consumer choice; and income tax benefits reported by the water industry.