Saturday, April 16, 2011

Water Resources and City Economics

The growing risk of water shortages in the Verde Valley and throughout the state of Arizona will have a direct effect on the bond ratings of the cities involved, says an opinion piece in the October 20, 2010, New York Times

Snowmelt is regional  and usually doesn't reach the broader environment
While lowered bond ratings are not currently a problem for many communities in this area, it likely could be in the future.

Part of this liability is due to local squabbling for this resource, commonly referred to as “water wars”, and the attendant legal costs that drain municipal budgets.

“Municipal bonds are bought and sold on the basis of their credit ratings,” the NY Times article reminds us, “yet today these ratings take little account of utilities’ vulnerability to increased water competition.”

Pursuing a cautious perspective against future water costs, the city of Cottonwood bought several water companies in surrounding areas and shortly thereafter raised the rates.  In an editorial of August 22, 2010, the Verde Independent characterized this buying as a “spending spree” and suggested the city follow the advice of its financial director, Rudy Rodriguez, to go on a PR offensive “so people understand why the attendant rate hike is necessary and important.”

The Verde Independent is correct that the city should communicate its intentions to its residents.  It's just good politics to tell taxpayers how the city is spending its/their money...and why. 

Rates, by the way, were decreased at the lowest use levels but, none-the-less, raised at higher levels.
There was a river but vegetation didn't know it.
It seems reasonable to give breaks to “minimal” users and raise rates for large users.  In other words, conservative water users will be charged the same or less than before the rate increase and “excessive” users would be charged at increased rates.

What is essential is that people realize we are living in the desert where water is scarce and finding a path to sustainable use can be complex. . .water is a limited commodity and should be expensive. 

Cottonwood officials realized that water use will be governed by our wallets and it was a far-sighted city administration that intelligently planned for the city’s future.

Of course, the saga of Cottonwood-water has a negative side.  According to a local resident the city is again planning to alter its rates upward because decreased water use has put a dent in anticipated revenue.  
Cliffs, Mesas, Water.

But, the Arizona Republic has another take.  In an April 15, 2011 article focusing on Phoenix, the newspaper wrote, "Residents Should Know Who Is Behind Water-Rate Hikes".  The paper claims the projected increase is due to the State of Arizona withdrawing $7 million in funding from the Arizona Dept. of Water Resources and shifting the burden to cities. The AR pins blame on Gov. Jan Brewer.

In either case the Arizona Republic echoes the Verde Independent in calling for better communication between city administrations and their residents. 

The likelihood is residents won’t like what they hear.  Water is going to be expensive…very expensive. . .and it should be because water in the desert is a scarce commodity.