Some More Xeriscaping Economics

Talking about the economics of xeriscaping from the perspective of the home owner did cause some discussion.  There were some really great comments, and I hope I start addressing some of them here.

I think that are at least two perspectives that need to be considered if we are going to understand the role of xeriscaping in water conservation.  From the perspective of the home owner, using the assumptions I made, it doesn’t make financial sense.  Xeriscaping an existing yard won’t pay back any time soon.  I think it is important to look at it from this perspective, as it part of the reason why xeriscaping can be a really hard sell.  Now, saving money isn’t the only reason to xeriscape, and I’ll try to talk about that in a future post.

For now I’ll stick with the economics, but switch to the perspective of the community.  I’ll play with Kelowna numbers again, because Kelowna does a nice job of keeping records. They have a great web page, Water Use Statistics.  These numbers are a good basis for setting up another toy example, this time to illustrate what xeriscaping does for the city as a whole.

The figure below shows the annual water use pattern for an ‘average house’ that I’ve just invented.

Average single family residence, around year 2000. Conventional landscaping, 640 cubic meters per year. With xeriscaping, 385 cubic meters pear year.

I’m assuming that with xeriscaping, outdoor water use is reduced by 75%.  In total, this means that the xeriscaped house uses only about 60% as much water as the conventional house.

Now taking the community perspective, a key issue is building capacity to accommodate growth.  Another issue is that capacity has to be built to accommodate the peak.  Expanding the total capacity to deliver water and accommodating a growing peak is expensive.  Lets say that to accommodate ten years worth of population growth in Kelowna, if everyone just had conventional yards, would cost $20 million on water infrastructure upgrades.

To build that infrastructure, the city would have to borrow money.  If the city can borrow money at an interest rate of 2%, then by delaying the $20 million upgrade by one year, they would save $400,000 on interest.  A fair bit of change.


The figure above shows how many homes we would need to reduce their outdoor water use by 75% in order to accommodate the new growth. The population is take to grow at about 2.5% per year.  There are 10,000 conventional homes to start.  If we buy space for the new immigrants, who I assume use the xeriscape amount of water, then by converting existing yards we can delay the capacity expansion by 20 years (where the total xeriscape line hits the original connections line)!

So what does this mean for the home owner?  Well, starting with the original 10,000 connections, delaying the capacity expansion by a year stops an increase in the water bill of $400,000 (assuming the city self finances this).  $40 per household.  That really doesn’t change the calculations in my earlier post.

However, maybe this would.  The city needs to convert on average 500 homes per year.  Dividing the $400,000 by 500 gives $800.  The city could give $800 to each of the 500 people who xeriscape their yard.  I’ve focused on xeriscaping here, but really what it boils down to is that the city has to be able to reduce the water use of existing home owners by enough to accommodate the growth.  That works out to about 3% each year.  So, if the city can find ways to reduce the water use of existing residents by that 3% for less than $400,000, it is a worthwhile investment.

I’ve also assumed that accommodating ten years of population growth costs $20 million.  That may be in the ballpark if we are starting with 10,000 connections.  However, the next capacity jump after this one will probably cost a lot more.  At some point there won’t be any more water in the Okanagan that we can use, after which the only way to make space for newcomers is to reduce existing water use.  When that time comes, someone who will put down half a million for a new house will hardly blink at paying an existing resident a few thousand dollars to xeriscape their yard.

So, does it make economic sense to xeriscape?  On the cash alone, probably not right now.  However, at some point in the future it certainly will.  For now, if we are going to encourage xeriscaping, we’ve got to look for those special cases where it does make financial sense, and where it doesn’t look, for other reasons.  More in a future post.

Some Xeriscaping Economics

Late last year I attended a meeting of the Irrigation Association of British Columbia here in Kelowna.  The meeting included many professionals from the irrigation industry, as well as a mixture of local government representatives and people from other sectors impacted by the irrigation.

The highlight of the event was their main speaker, Doug Bennet, from the Southern Nevada Water Authority (click to see the program).  Doug did a fantastic job of describing some of the challenges that his group faces, and provided some thoughts on how the lessons learned in Nevada may have relevance for the Okanagan.

Like Nevada, here in the Okanagan most of the water consumed by residential water users is used on lawns.  In fact, as Neil Klassen with Kelowna’s Watersmart program pointed out, most of the water used inside the home is simply recycled through the lake.  Most of what we put on our lawns ends up in the atmosphere, either passing through plants or simply evaporating.  So, for the city of Kelowna, saving water is pretty much all about reducing outdoor water use.  The most effective way to do that is to convert our landscaping to something that needs little or no water.

If getting rid of our water demanding lawns is so good, why don’t we do it?  In Kelowna, we pay for our water (click to see the rates).  Ripping out a lawn and replacing it with water conserving landscaping will reduce our water use.  But the complete economic picture also includes the cost of replacing the lawn, not just the savings on reduced water use.

To calculate the benefits, we need to estimate the water use, how much water will be saved, and what the impact will be on the total water bill.  This isn’t quite as easy as calculating the water saved and multiplying it by the water price because the price of water goes up the more water one uses.  In the summer, when water use is highest, the savings is also the highest.  The top chart in the figure below shows the water savings and financial savings for a household that normally uses 40 cubic meters per day in the winter and uses almost four times as much in July.  About half of this households water use is outdoor use, everything above the basic 40 cubic meters per day.  If this household reduces its outdoor water use by 75%, possible with Xeriscaping, then its water use would fall to the lower line in the graph.

Water Use and Water Charge for a hypothetical household that uses 885 cubic meters of water per year, almost half of which is used outdoors.

The lower half of the figure shows the monthly water charge that the household would face.  The rate structure used by the city means that the financial savings, as a percentage of the water bill, is bigger than the water savings.  This is meant to create an incentive to save water on those things that push household use up beyond basic needs, but to leave basic needs affordable.  For this hypothetical household, the savings is about $180 per year.  The savings won’t take the family to Hawaii in February, but it will give them a nice night out.

Are there any other benefits?  People who promote xeriscaping talk about the time savings.  Maybe two hours of weeding and trimming per month instead of eight hours of mowing the lawn.  If it would cost you $20 per week to pay the neighbour’s teen to mow the lawn, then this is another $60 in savings for each month, and maybe $360 or so per year if that lawn would have to be mowed for six months.  A bit ironic that the time savings is worth twice the water savings, even though we are promoting xeriscaping because of the water savings.  Of course, if you enjoy mowing the lawn – maybe it is an excuse to get outside, and maybe the rhythmic sound of the motor is somehow soothing – then this is not really a savings.

So we might save as much as $480 per year by converting our yard.  Now what about the cost?  A study by Kyra Dziedzic at the University of Lethbridge did a bit of a cost-benefit analysis of xeriscaping (click here).  Kyra found that the cost of xeriscaping a yard was around $8 per square foot.  Kyra estimated that for water rates in Lethbridge, xeriscaping would turn a profit for the home owner in something over 500 years!  If my hypothetical home has a 66 feet by 120 feet yard, half of which is lawn, then the conversion cost would be $31,680.  If we count the time savings, then it would take 66 years to pay this back.  If we don’t count it, then it would take 176 years.

These numbers don’t make xeriscaping an existing yard a very smart financial option.  Why then would anyone do it?  How can we get people to change?  Are there any policy tools we can use to encourage more xeriscaping?

I’ll continue some thoughts on this issue in a future post.  In the mean time, I’d welcome any thoughts you may have.  You may change my own ideas before I post again!