How it works

Currently in all urban water markets/jurisdictions part of the income from the sale of water to consumers is ear-marked for capital works and sustainability measures to both increase supply and to conserve water. In most jurisdictions the unit price of water for those who consume more increases with consumption (via so called block tariff pricing schemes).

With Water Rewards these funds are channelled through members, who consume less than the sustainable amount of water (see figure below). Rewards are only available to be spent on projects or devices that will help further sustainability of water supply. The rewards will gravitate to those projects or devices that give the reward holders the best return on their investment ie. to those devices/projects that save the most water.

The money for rewards is the difference between the wholesale price and the price charged to Water Rewards members which will normally be the same or more than that charged by the Water Authority. Rewards are transferable and a market will be established for rewards. The cash value of rewards will always be less than their face value.

Water Rewards itself is a water saving project because it encourages members to consume less and hence it can buy rewards and use the difference between the purchase price and the face value to provide further capital to develop the Water Rewards. It will always provide a market for trading water rewards.

Introduction to Water Rewards

Water Rewards is a new concept in communities building for themselves a Sustainable Water Supply. This blog comes from the originators of the idea and seeks to learn and listen to make the system better fit the needs of the Community.

Introduction to the idea

Water Rewards is a new concept that will encourage and support sustainable use of water by households, urban industries and businesses. Its primary objectives are to use market-based mechanisms and incentives to encourage consumers, who are members of Water Rewards, to use less water by financing and rewarding efficient water use and reuse. It is, in practice, a community-owned and initiated urban water trading scheme.

When successfully implemented, Water Rewards will remove the need for governments to impose water restrictions, or for monopoly water retailers to impose statutory price increases in an attempt to control demand. It builds on experiences in the rural water industry, urban electricity retail market and the NSW carbon credits trading scheme (GGAS).

Water Rewards regulates itself through pricing, ongoing consumer education and investment in water conservation measures. It does this by using pricing to discourage excessive use of water, providing rewards to encourage water conservation and by controlling funds from the sale of water so that they are invested on water conservation measures as well as water supply. At its heart, Water Rewards rewards the individual for changing his or her approach to water use.

The scheme does not mandate how water conservation is to be carried out. It allows members to invest their rewards in any of a wide range of accredited water savings projects and technologies. Consequently, it uses economic incentives in an equitable and politically acceptable manner. It requires no change to existing infrastructure systems and can be applied immediately to any community which has metering of water consumption.

Water Rewards will buy water in bulk from a water supply authority and sell water to its members. It does so in much the same way as an electricity retail company, a mobile phone services or ISP company. Water Rewards members are volunteer consumers from any jurisdiction that has a metered water supply and where the water authority agrees to bulk sell water. The scheme is commercially sustainable if it sells the same amount of water to more members at the same price. Its economic objectives are to reduce the per head consumption of water while still retaining members. It will achieve these objectives by:

· Placing no water restrictions on consumption;

· Charging a higher unit price to Water Rewards members who use more water than the ‘sustainable’ level on a per capita basis;

· Rewarding consumers who use less water per head. The rewards are transferable but can only be spent on ways to reduce water consumption or redeemed on this basis. This will help develop the market for water saving and reuse systems and provide funds for community or regional projects;

· Harnessing the goodwill generated through the knowledge that Water Rewards is a not for profit, organisation with a positive environmental mission.

Water Rewards has the potential to remove the need for government-imposed water restrictions; ensures that monopoly power is not abused by those in control of water funds; is fair, equitable, transparent and easily understood by the public and business community. People will join because of rewards, because they believe in sustainability and, most importantly, because they will not be subjected to water restrictions. In other words the Water Rewards scheme will succeed whether consumers join out of concerns for water sustainability or purely for reasons of self-interest.

Rewards are granted for actions that encourage sustainability but they can only be collected by a further action that encourages sustainability.

See the next post on how it works in more detail