Flushing Money Down the Toilet?

Sometimes important questions in environmental economics are not particularly glamorous.  Take for example, a recent project I completed together with Laura Taylor, Professor and Director of the Center for Environmental Economics at NCSU and Jonathan Lee, a Ph.D. student at NCSU.  This project examines cost effectiveness of a program in Cary, NC that offers rebates to households that replace old toilets with new, low-flow toilets.  On good days we call this the “toilet project.”  I’ll leave it to your imagination to determine what we call it on bad days!

The Town of Cary (TOC) introduced its High Efficiency Toilet (HET) Retrofit Rebate program in June 2008. During the first 13 months of the program, TOC offered a $150 rebate per toilet for water customers who replaced toilets that use 3.5 gallons or more per flush with WaterSense labeled high efficiency toilets which use 1.28 gallons per flush (gpf).

In June 2010 we mailed a survey to the 305 households that received a rebate during the first year of the program.  We received responses from 245 (80.3%) of participants.  The survey is structured to let us to compute the water savings that can be attributed to the rebate program.

Before we talk about economics, let’s think about engineering estimates of water savings. On a per-flush basis, an engineering estimate of the water savings is simply the difference in gpf used by the original toilet and the HET.  To compute an annual savings, we multiply the per-flush savings by the expected number of flushes per year. Carrying out this multiplication exercise and using data on how many toilets are in the home and how many people live in the home, we estimated an average savings of 4,577 gallons per high efficiency toilet installed.

Why might the water savings from the rebate program differ from these engineering estimates?  This is where the economics begins.  First, there is the possibility of a “rebound effect.”  That is, people install a higher efficiency appliance and they feel justified in using it more.  In the case of HETs the concern is probably NOT that they go to the bathroom more, but rather that they flush more because the toilet doesn’t work as well as they would like.  Second, some of these toilets may have been replaced even without the rebate.  A household doing a complete bathroom remodel may replace their low-efficiency toilets anyway and the rebate is just a windfall gain to that household.

We are able to examine real water savings from water utility bills for both program participants and similar households that did not participate.  We find little evidence of a rebound effect, the HETs toilets seem to deliver the expected engineering reductions in water use and that each toilet installed saves between 4,000 and 4,500 gallons per year per toilet.  The water savings that is attributable to the rebate program, however, is significantly less – approximately 1,750 gallons per year, per toilet installed with a rebate.  About 40% of the rebate participants would have replaced their old toilets with an HET even if the rebate had not been available to them.  In addition, we find that approximately 20% of rebate recipients would have replaced their old toilets with a new standard toilet (not HET) had the rebate program not been available to them.  New toilets are much more water efficient even if they aren’t HET.  The water savings of going from a new toilet to a new HET toilet are only 0.4 gpf (1.6 gpf for new toilet – 1.2 gpf for a new HET toilet).

Our final analysis focuses on the cost-effectiveness of the rebate program.  By investing in HET toilet replacement through the rebate program, the Town of Cary avoids future costs over the lifetime of the HET (assuming the old toilet would not be replaced in the future).  We focus on two measures of the avoided sewer treatment costs associated with fewer gallons flowing back to the system as a result of HET installation.  The present value of the avoided costs outweigh the initial investment cost (the rebates) if one assumes all toilets were replaced because of the rebate program.  However, if we consider only the water savings that is directly attributable to the rebate program, we find that the rebate program’s benefits to the Town of Cary did not outweigh the initial investment cost.

One way to increase the cost effectiveness is to reduce the up-front cost of the rebate program. Our calculations indicate that if the Town of Cary reduced the rebate to $115 per toilet, the program would have been cost-effective under all scenarios considered.  Since the first year of the program, the Town of Cary has reduced its rebate from $150 to $100.  Even with the lower rebate, the Town reports that the requests for rebates have exhausted each year’s budget, suggesting the $100 rebate is still a substantial incentive to households.  If the $100 rebate results in about 30% of rebate takers being households that would not have replaced their toilet at all without the rebate, and another 20% being households that chose an HET over a new 1.6 gpf toilet as a result of the rebate, then the program is cost-effective.

Questions for Discussion:

  1. One of the analytic challenges for the project was determining what the costs-savings were to the TOC when a toilet uses less water.  Our first approach assumed that if they didn’t sell a gallon of water to one of their own households, that was a gallon they could sell to a neighboring utility.  However, the central NC utilities have an agreement to sell water to each other at their lowest residential rate.  So no profit would be made by selling water to Durham instead of to a Cary resident.  We settled on avoided treatment costs.  What do you think the benefits to the TOC are?  How could the program be adjusted to provide more benefits to the TOC for conservation?
  2. Another strategy for increasing cost-effectiveness of the rebate program is to better target rebates to households that wouldn’t otherwise replace their toilets.  Can you think of feasible ways to do that?

31 Comments

  1. Natalie Kraft

    I would like to propose a few solutions to Discussion Question 2 above. I think the first step would be to determine the reasons why households wouldn’t replace their toilets without the rebate. To better target a group, I think it is necessary to define the groups as best as possible. Two major reasons for not replacing the toilets jump out at me: 1) they can’t afford to replace their old toilets with new ones without the rebate or 2) they can afford to pay their water/sewage bill each month and water usage doesn’t concern them so they don’t have any great incentive to go through any inconvenience of replacing their toilets.
    Households with reason 1 would most likely include lower-income families or families living from paycheck to paycheck. So be sure that those households are informed about the rebate. People don’t want to put effort & time into an endeavor that the only briefly hear about or see advertised once. Create a website, hold information sessions, pass out or mail flyers with information. If people with reservations about the rebate program due to the cost of replacing the toilets, understand that on top of the $150 rebate, they will have a continually lower water/sewage bill, they’d be more likely to enter the rebate program.
    The second reason is harder to tackle because it stems from a general lack of caring, about the money and/or about the environment. I think the best way to approach this, rather than through financial gains as with reason 1, is through societal means. People are incredibly conforming and have a tendency to follow the crowd. Make it “trendy” and people will flock to it. Starbucks, Uggs, organic food – all examples of movements that took off because they became trendy (that organic food is good for you was a completely secondary phenomenon). If you make water efficiency popular, those who don’t care about the money saved will enter the survey population available for the rebate program.
    I know there are plenty of more reasons why households wouldn’t replace their toilets, but these two seem pretty prominent and could cover a pretty broad portion of the population. And I’m sure there are also other ways to address these two reasons than that I have listed above, but they are merely suggestions that I believe are feasible if correctly implemented.

  2. Sofia Munoz

    I would also like to propose some alternatives for the second question.

    As Natalie mentioned, families with lower income should get informed about the rebate. I think communicating about a program is one of the key factors that contribute to its success. I think that a communications campaign (via websites, mail, information sessions, e-mails) would help people be better informed and make better decisions. While it is true that some people tend not to act even if they have the information (changing to HET in this specific case), this might probably be because they don’t really believe in the benefits they can get from such kind of program.

    Therefore, I would additionally recommend gathering information about HET buyers to be able to learn more about their background and where they live. This would help identify those people living in neighborhoods that are more inclined to changing their toilets. Of those neighborhoods that have the lowest buying rates, it could be useful to have a slightly different communications campaign strategy. This could include how much those neighbors that are using the new toilets are saving, so that people could be much more familiar with the benefits this program yields.
    I am aware that this kind of strategy has costs, and that the Town of Carry might not have sufficient budget for this. Nevertheless, I do think a well-targeted and attractive communications campaign would be a great complement for the HEC Retrofit Rebate program.

  3. Francisco Santiago-Avila

    Regarding benefits of lower water usage, besides avoided treatment costs, this could also assist in Cary’s development. Less water usage by Cary’s residents right now means that Cary can sell its water to Durham; however, in time it could mean more water supply for more industry/residential development, which could spark economic development. By saving water, Cary could be positioning itself to be able to support a higher population and having potentially more economic development. However, this could prove pretty difficult to quantify. in the absence of development, this unused water could also prove beneficial for the surrounding environment. The program does provide more benefits, by saving households money. A good question would be if households are aware of that they won’t only be saving water.

    In order to increase the cost-effectiveness of the program, we would need some socio-economic and demographic household data. I’m thinking that households might not change their toilets because (1) they don’t care about saving water and/or have money to pay for it; (2) they don’t have money to pay for the HEC or are not familiar with it. Using household data, we could target these groups of people, first surveying them to get information on their environmental values (specifically water conservation), or we could use a CV study to observe their WTP for increased water supply. Another, maybe complementary method, could be to do a CBA on the household level benefits of switching to an HEC, in order to increase demand for the product. With all this information, you can target the program to certain households, maybe with income or household members requirements, together with a good communications campaign.

  4. Sugandha Chauhan

    As the households using HET save 4,000 and 4,500 gallons per year per toilet, the per capita water demand and consequently the total water demand for TOC will decrease. Thus, the amount of treated water required to cater to the population of TOC will reduce which in turn will reduce the amount of sewage that needs to be treated. The total cost reduction on treatment of fresh water and sewage will be the benefits for TOC. I do not quite get why TOC needs to keep producing the same amount of water as it was doing before introducing HET if it does not need as much water. Why should it have to deal with the problem of disposal of extra treated water?

    Households not using HETs currently can be influenced to shift to HET by extensive advertising through media and internet. Interactions can be facilitated between people who use HET and people who have not yet switched to HET to emphasize the benefits of HET. Also, if people are unwilling to install HET in the homes, be it because they are indifferent to the cost savings or unconcerned about saving water, it should not matter to them whether they are paying extra in their water bills or for installing a HET. However, the task of changing toilet from a standard one to a high efficiency one might be a hurdle in the success of the program as some people might be just unwilling to go through the effort of actually doing that.

  5. Liz Bloomhardt

    One end of the road I live on is closed to traffic as contractors for the water utility complete a project to expand the

    capacity of the sewer line. At the same time I am completing several bathroom remodels (x3) and we have not replaced the

    toilets. The question therefore naturally arose: would it have been more cost effective for the utility to pay me to replace my

    toilets than to expand the sewer?

    Why are we not replacing the toilets? Pay back time. If a HET unit saves 4000 gallons, and I think we pay about $60 for that

    much water, and assuming a new toilet costs $300, with no discounting, the payback period with these numbers is 5 years. Typical

    homeownership lats about 7 years (at least before the downturn)… so there’s a precentage of the population for whom this will never payoff during their tenure of ownership.

    Another way to structure the rebate would be to change a different parameter to incentivise the homeowner and lower the payback time. For instance, give the new toilets away for free, then increase the cost of water for the home owner to pay for the program. This would address that up front cost deterrent for the homeowners who are likely to opt out for that reason.

  6. Jessica Lab

    The major benefit to the TOC is the avoided treatment costs of the water. Less water is being flushed down toilets and therefore less water needs to be treated if these low flow toilets are installed. If enough residents switched to these low flow toilets, the TOC could potentially avoid expanding or building a new water treatment plant. Another less tangible benefit to the TOC is positive advertising to potential new residents. I am sure that the TOC has a part of their website dedicated to their sustainability efforts and they could describe this rebate program as a way they are being more sustainable. While this probably won’t have a huge impact on the decision to live in Cary, it could leave a positive impression. Because the rebate budget is still completely selling out even after a reduction in the amount of the rebate, the rebate amount could be lowered so that more residents can take advantage of the program. While the overall budget for the program would not be reduced, the TOC would benefit because more people would have the opportunity to install low flow toilets. But the TOC would need to be careful to not lower the rebate amount too much because most people would not make the switch if they don’t believe the incentive is not high enough.

  7. Sara Dewey

    This reminds me of a rant Senator Rand Paul went on in the Energy Committee that I witnessed during my last job. Here’s a link to the video: http://www.youtube.com/watch?v=FAn1FWInBi0. He was angry that the Dept. of Energy was bringing more energy efficient products to market, and in some instances mandating higher efficiency. He says to the Dept. of Energy official testifying at the hearing, “My toilets don’t work in my house [because they are the low-water use type]. And I blame you.”

    I am glad to say that that senator I was working for reprimanded him for being so rude. But more importantly, I think this does point to the challenge of targeting reluctant households with incentive-based programs rather than just creating industry mandates. Changing behavior and sharing information with consumers is more difficult to implement from a government’s perspective, whether it is the Dept. of Energy or the city of Cary, than mandating manufacturing standards at the industry level. The problem, then, becomes political: industries are well organized to block standards they oppose.

    In terms of increasing participation in this program, I think it works best to engage people in their communities. There is a reason that volunteer from political campaigns canvass door to door. It’s hard to get through to the public when everyone has so much information to process every day. Unfortunately, this approach is time consuming and costly. I think it could be efficient to run this type of rebate program through Home Depot and other home improvement stores. That was part of the plan in major residential energy efficiency legislation called Homestar that stalled in the Senate last Congress. The idea is to have private-sector buy-in so that the government is not entirely responsible for managing the program, and it ensures that people have the tools to make an informed decision at the store based on full knowledge about rebates and other incentives.

  8. Christina Van Winkle

    Regarding targeting households not currently in the market for an HET toilet, I would search the public records for households with 2-3 bathrooms, and send a targeted mailing with an easy-to-comprehend report of the cost savings over time. I would also try to form a partnership with the local Home Depot and other DIY outlets to market to customers that might be doing home repair but not specifically in their bathrooms. These ‘low hanging fruit’ customers are already engaged in DIY home repair and could easily be convinced to upgrade their toilets once they learn about the rebate program.

    Regarding benefits realized by TOC, perhaps it might be useful to determine if the property value increases for homes with upgraded high-efficiency appliances such as HET toilets. These higher property values would in turn provide greater tax revenue to the TOC, and perhaps attract higher income households that could be a boost to the local economy.

  9. Angela Vasconcellos

    I think that this posting really gets at the heart of the challenges of estimating the true economic benefits of a resource conservation program like water conservation with more efficient toilets. To address question one, I think that there are several benefits from higher efficiency toilets, particularly in the longer term, that should be considered. The Triangle area has been and may be in the future facing a drought (I’m not totally sure if there is currently a drought). Given this, there are additional costs that should be considered as fresh water becomes a potentially scarce resource.

    Coming from the west coast, where droughts seems to be common place (and water is very scarce), I think that there is not enough emphasis placed on the long term costs associated with prolonged drought. Not only does it affect water quality, but this will translate into effects on agriculture and other industries. This could be extremely detrimental to the local economy.

    When thinking about whether more efficient toilets are cost effective, I think it is important to try to estimate the long term costs of not doing the program and not conserving water and the long term benefits that may result from doing the program with cost savings in the future.

  10. June Reyes

    I believe that the high efficiency toilet program provides increased water quantity benefits, which will become more relevant as population in the TOC and water providers look to maintain water resources, as well as avoided capital costs of transport, storage, treatment, and distribution of water that was conserved from the HET program. In addition, for each resident, it provides some savings from their water bill that can be spent elsewhere. To garner even more benefits for the TOC, this program could be coupled with outreach for other high efficiency products, which may result in more savings with little effort.

    When thinking about increasing the cost effectiveness of the program, targeting rebates to households that wouldn’t otherwise replace their toilets provides greater benefits to the TOC, but this task is a challenge. One way to target households is to do analyze the common traits associated with those who would have replace their toilets with HET in their first place. This could mean looking at the survey data again and picking these attributes out — some attributes that can be explored are distance to the town center or stores where HET are (under the assumption that those further away from these areas are less likely to purchase regularly from them) and the age of the house (under the assumption that older houses would need HET retrofits more than newer homes that may just want newer toilets).

    Overall, it seems like the benefits of such a program to the town of Cary would be hard to communicate especially in the absence of incentives to conserve water such as the HET program. The issue of water conservation also can be difficult for private water supply companies who would make less money from water conservation.

  11. Taylor Gelsinger

    The avoided treatment costs are the most beneficial result of the project to the TOC. However, by reducing the amount of water being treated, the available clean water is greater, allowing for more development of the TOC. There is also security in case of environmental factors, such a drought. As I learned this summer, the weather can be harsh and unpredictable. Having an extra supply of water can be a good thing.

    In order to target rebates to households that wouldn’t otherwise replace their toilets, we could look into the socio-economic factors of the 30% who have participated in the rebate program, but would not have replaced their toilets without the rebate. By understanding their background better, possibly through the survey and socio-economic factors of the areas they live, we could better understand which households need to be targeted for the rebate program, who would otherwise not replace their toilets. Once the target market is identified, the rebate program could be promoted through popular media, such the local newspapers delivered in those areas, informational flyers, and information booths at events put on in those areas. Another approach to reach the target market, would be to offer the 30% who did participate in the rebate program, but wouldn’t without the rebate, a word of mouth incentive. They could receive a cash reward for every household they refer to the program, which goes through with it.

  12. Morgan Fleming

    So, I’ve been needing to go to Home Depot for the past few weeks now to pick up something for a home project, and I decided to use this blog as the perfect excuse to make the trip. I went (I didn’t find what I was looking for) and took down data on all the toilets Home Depot has to offer, including price, gallons per flush (gpf), flush power, years of warranty, and the number of color options. After putting all of this into Stata and doing some simple analysis, this is what I found:

    If you need to “flush a bucket of golfballs in a single flush,” then, for $234, Kholer’s Champion 4 is the toilet for you. Alternatively, if you are big into the American way of “go big or go home,” there’s little bigger than the Cimarron. At $258, you can “flush 4x more waste than the average adult needs.” Parents of children who haven’t quite yet figured out how to use less than half a role of toilet paper to wipe their tush might also find either of these options appealing.

    But for the rest of us, there is this: The average cost of a HET toilet is $168 (after dropping the one $430 outlier) while the average cost of a non-HET toilet is $166. There are two dual-flush options also available at $198 and $98 apiece (not included above). The range for HET toilets is $98 to $298 (again, not counting the outlier), while for non-HET toilets it is $54 to $234. Additionally, HET toilets had notably more options (n=14) than the non-HET toilets (n=5).

    A simple regression of gpf on price reveals that there is absolutely no relationship between the two (coef=-0.10, P=0.930, n=22). After regressing price on all of the variables I had data on, the single biggest predictor of price (and the only significant one) was the number of color options for the toilet (coef=37, P<0.01).

    Why did I do all of this, you ask? I wanted test a simple question, “Is there a real price difference between a HET toilet and a non-HET toilet?” The answer is pretty clearly no, there isn’t.

    What’s the significance of that? Well, it means that we aren’t really talking about getting folks to choose between a HET toilet and a non-HET toilet. What we are really after is getting folks to buy a new toilet, period (and then to buy the most efficient one on the market). As Lori pointed out, even a standard new toilet is a vast improvement over an old one.

    So what does this mean for the TOC and encouraging non-participating households to jump in? Well, not much really- at least not anything more than what has already been said. The important thing, I think, is that it is actually possible to get a new HET toilet for under $220, after tax. This means that the HET rebate knocks out nearly half of the cost.

    If TOC really wants to target low-income housing and rental properties, it might take things a step further and offer a higher rebate to low-income and rental properties. They might balance this higher rebate by requiring those properties to also have higher occupant to toilet ratios. For a rental like mine, with 2 people sharing 1 toilet, the number of flushes per year could reasonably be expected to be double that of a 1 person, 1 toilet property (like the rentals across from mine). Thus the savings should be greater and, in turn, the benefits larger too.

  13. Peter Browning

    The blog post focuses on the effectiveness of the HET program amongst residential households. I’d be interested to see its effectiveness in targeting businesses in the TOC. Conceptually at least, it seems like the provision of the rebate to business customers may reap higher benefits for the TOC because of high occupant to toilet ratios. Additionally, businesses may be less likely to replace toilets on their own in any given year simply because bathroom retrofits are less common in many business contexts (this is my own impression). Finally, because of the high occupant to toilet ratio in business contexts, the water savings to the customer may be a stronger incentive to businesses.

    Switching to the benefits evaluation question, I agree that sewage treatment savings are largely the best indicator of benefits. However, there may be significant cost-savings from reduced pre-treatment needs as well. Another benefit may be cost savings from prolonging infrastructure, although this benefit is likely more difficult to quantify than the treatment costs.

  14. Kelly McElwee

    The benefits to the TOC would include the increased capacity of the water infrastructure. This means fewer resources used for sewer expansion, like Liz mentioned above, but also the ability to handle more people on the existing grid (a selling point for attracting new business, especially water-intensive ones).
    I think Cary’s best strategy for increasing the benefits accruing to them from this program would be to install for free HET toilets in high-use buildings like schools. This would not only save water where toilets are frequently flushed, but would provide a platform for informing students about HET toilets and efficient water use. Then you have not only educated an entire group about the issue, but that group might in turn talk to their parents about it.
    It might also be prudent to target a group, like new homeowners, who might be interested in doing small upgrades before they move in, especially if they’re buying an older house. I think this would be more effective if you market the program in terms of cost-savings to the homeowner, because a lot of people don’t feel compelled to spend that money based on water savings alone.

  15. Leland Moss

    There are a long list of benefits to the TOC for implementing this. The most obvious being the cost savings in supplying water and treating water that is used. It also makes the town look better from an environmental standpoint, showing they can reduce their water consumption.

    To me the best way to make households replace their toilets is use cost to your advantage. Pretty much everywhere you go water is under-priced. Whether due to lobbying of different groups or people claiming that it is their right to be provided with water because you need it to survive. We need food and shelter too, but fortunately the government has not taken over supermarkets and house sales. Use what we know from the market to our advantage. Increase the price of water to a price that more resembles its actual worth. This increase in profits will give you more funds to allow you to promote this program better. In addition many people will call complaining about the price of water and that is a great time to tell people about the toilet rebate promotion. Since the people complaining are the ones that would most likely take advantage of it.

    Admittedly there will still be those unaffected by the price who can afford to pay regardless, but the higher the price is pushed, the more people you will have switching. The fairest would be to push it to the point that with the new toilet the price they pay for water is the same as it is now with the old toilet. But admittedly the higher you go the less water people will use, conserving even more.

  16. Amy Kochanowsky

    In thinking about question #2 – targeting households that normally wouldn’t invest in these toilets – I think immediately of my situation as a renter.

    In the realm of energy efficiency, split incentives are one of the largest barriers to making homes more energy efficient, even when energy efficiency investments are cost effective. This problem can be applied to water conservation in the case of rental housing. The developer who constructed my house probably bought the cheapest toilet because the house was being built as a rental unit, and the efficiency of the toilet has no bearing on the developer. As a renter, I am now faced with the higher water bills that come from the developer’s investment decision.

    This leads me to ask, how can we incentivize builders to install more efficient appliances and toilets when they currently have no financial incentive to do so? Policy wise, Cary could enact tougher building codes to ensure residents buy more efficient toilets. To provide a financial incentive, a solution could be to create a national performance label for homes, much like the EPA fuel economy stickers on cars. The labeling would increase a renter’s awareness of the home’s energy and water use. A prospective renter could find out the home’s projected utility costs for the year, and use this information in deciding whether or not to rent this particular property.

    Obviously this is not a solution that the town of Cary itself can enact, but it may be a national solution to the split incentives barrier. It targets a more reluctant group of toilet investors in a roundabout way.

  17. Luqin Liu

    This topic is quite interesting.As for the second queston:Another strategy for increasing cost-effectiveness of the rebate program is to better target rebates to households that wouldn’t otherwise replace their toilets. The important here is how can we find who are the households that would’t replace their toilets wihtout the rebate program. So maybe we could use the CV study in the area in advance of the program.In the CV program,we collect information about people’s social and economic characteristics and their WTA to replace the toilet respectively.Then we may find certain type of people(certain social and economic characteristics)may not wiling to replace the toilet.Then we can target them and give them incentives to have them repaired the toliet.

  18. Jessie Ritter

    I find this topic of particular interest in light of some work I did with the Raleigh office of Environmental Defense Fund two summers ago. EDF has been a player in trying to change North Carolina water resource policy, a hot topic in recent years as the state population continues to grow at an overwhelming rate. Most of this growth has been along the coast and in the piedmont Triangle region, and cities like Raleigh and Durham and the Town of Cary are finding themselves with more and more residents in need of public utilities. This increase in population of course puts a strain on the area’s water supply, and I’ve witnessed many heated discussions in committee hearings at the state level over the best way to manage the resource and ensure that every town has the water they need for their residents. Droughts like we’ve experienced in recent years make the situation even more precarious. While environmental groups are lobbying for a comprehensive state-wide water permitting bill to responsibly account for the water in North Carolina’s 17 rivers, an approach in the meantime has been to push for water efficiency measures at the local level.

    In answer to Question 1, I would suggest that in addition to avoided treatment cost, another benefit to the TOC might be avoided cost and conflict in the future as water resources are stretched thin and additional regulations fall into place. I think that the present value of a gallon of water in the TOC is less than the value will be 5, 10, 15 years down the road. Or in other words, the cost of providing a gallon of water to residents will only increase over time, at current population growth rates. Therefore, by encouraging such water efficiency measures to be implemented now, the TOC will benefit in the future by having more water available to accommodate additional growth and development, drawing new residents in.

  19. Jason Wong

    One important piece of information is missing: how much does HET retrofitting cost? I think that it matters a lot, because a large factor for determining the attractiveness of the program to people is the percentage they save from the rebate. If the HET retrofitting costs $300, and the rebate was $150, or a 50% rebate, more people would be willing to take it up than say, if it cost $1500.

    Another detail that might be glossed over is the variance in number of flushes between households. It is extremely useful to have an average (which is given as 4,577 gallons per year per household), but focusing on the factors resulting in different flushing characteristics between households might prove to be a possible policy tool as well. Having said that, a possible approach is to target households with higher flush rates:
    1. Households with more people
    a. Young families with multiple child dependents
    b. Multi-generational homes
    2. Households with people at home. A household with both adults constantly out working will have different flush characteristics than a household with a stay-home mom/dad.

    Again, like the other students suggested, we can increase targeted advertising towards such groups, or increase the rebate quantum for them. This might achieve higher returns in terms of absolute number of flushes, rather than just a percentage of households with HET.

  20. Alistar Erickson-Ludwig

    It’s fascinating the the TOC decided to do something like this. Was it instituted to decrease water use? I imagine so. I can think of a lot of other options or even public educational campaigns that may have been most cost effective and more beneficial. On a broader sense, water use, re-use and management of stormwater are all important topics on an environmental agenda. I am curious as to what the TOC is doing in these other areas. In addition I would like to survey city representatives and figure out how successful they felt that their incentive actually was and if they were going to do something like this again, what steps, if any would they take. In addition I’d like to know what, if any, cities have also done something like this.

  21. Tony Shirk

    In addition to the obvious benefits of increased water efficiency and avoided treatment costs for the TOC, the following benefits of water reduction include:

    (1) Fewer sewer system failures caused from water overwhelming the system.
    (2) While more relevant for severely water-stressed regions, the reduced need to construct additional dams and reservoirs or otherwise regulate the natural flow of streams, thus preserving their free flow and retaining the value of the stream and river systems as wildlife and recreational areas.
    (3) Reduced surface water withdrawals that degrade habitat both in streams and on land close to streams and lakes.
    (4) Efficient water use can also reduce the amount of energy needed to treat wastewater, resulting in less energy demand and, therefore, fewer harmful byproducts from power plants.
    (5) Historically, North Carolina has been considered a water-rich state with a humid climate and substantial underground water resources. In recent years, however, the state has faced water shortages due to extreme droughts, rapid population growth and aquifer degradation. With this in mind, the TOC could focus their efforts on how the aforementioned benefits influence the town’s competitive edge and economic development as a environmentally sound, prudent and resource-efficient locale.

  22. Jonathan Clift

    As I read the post, question 2 was jumping out at me before seeing it. Coming from the marketing world, that is one of the first things I think about when looking at an issue like this. Defining these households that “wouldn’t otherwise replace their toilet” seems more difficult than actually delivering effective communication to them. Someone above mentioned a CV study before enacting the program, it seems that would define who they are if you could get them to respond.

    Another point I found interesting, and how I would look at it if I was offered a rebate, is the breakeven point type thinking that Liz brought up. It seems that the most convincing reason to replace your toilets is care for the environment. If in fact the payoff is around 5 years, I can see how households wouldn’t consider it. Not only to you have to pay for a toilet, you have an opportunity cost with the day you spend with the plumber while the toilets are installed. That is often enough for me to put projects like this off at my house. When we bought our house, we made the builder put in HETs. We didn’t even consider the dollar savings as far as a water bill until I read this post. It was strictly environmentally motivated for us.

  23. Holly Davis

    In response to the question of how the toilet rebate program could be adjusted to increase the benefits to the Town of Cary (TOC) for conservation, I agree with Jessica that lowering the rebate, while serving the same number of users, could provide some savings for the TOC since there has been no drop in demand for a rebate as it went from $150 to $100. As Jessica noted, it is important to ensure the rebate does not go so low that there is little incentive to participate. While the savings from a decreased rebate could be used to target people who did not participate in the rebate, it would be fruitful to determine if the funds would be better spent on other water conservation measures. Providing free (or discounted) low-flow shower heads and faucets, similar to Duke Energy’s free CFL light bulb campaign, or offering rebates for purchasing water- and energy-efficient dishwashers and washing machines, might reap greater rewards.

    Another alternative for increasing the TOC’s benefits for conservation while addressing Question 2 – how to target households who would not otherwise replace their toilets – is a variation on the theme mentioned above of the TOC partnering with retailers such as Home Depot.

    Since a large percentage of the people who took advantage of the rebate program were already considering a remodel, if the TOC could team up with other remodeling vendors to offer complementary rebates and discounts in addition to the TOC’s toilet rebate, the TOC would likely get more participants in the rebate program. By lowering the consumer cost to participate they could tap into the group of people who would like to remodel a bathroom, but can not afford to with just a toilet rebate. The rebate program would then become a “bathroom remodel” rebate and the partners could include contractors who would offer a discount on performing the labor of the remodel and home furnishing companies that provide a discount on bathroom accessories, in addition to hardware stores like Hope Depot, which could offer discounts on low-flow showerheads in addition to HETs.

    Taking that idea one step further, if the TOC is so inclined, they could partner with a local television station to host a “Can Your Can” show similar to the “Extreme Makeover: Home Edition” or “This Old House.” The show could feature a participant in the “bathroom remodel” rebate program who gets their HET and/or remodel free, provided they agree to the filming of the complete makeover of the bathroom with water and energy saving devices. The TOC could negotiate a contract with the local television station for some of the revenue from the sale of television ads to home improvement vendors and this revenue could pay for the cost of coordinating a large number of home improvement vendors and contractors for the rebate program. If vendors did not want to pay for an ad, they could donate goods for a free mention of where the items on the show can be purchased. If the title, “Can Your Can”, is a little too crude for TOC viewers, some alternatives include “Spruce Up Your Shower”, “Extreme Makeover, Green Edition” (with copyright permission given by the makers of Extreme Makeover, of course), or “The Greening of Your Bathroom, and I Don’t Mean Mold.”

  24. Nora Stabert

    To increase the cost-effectiveness of the rebate program is to target rebates to households that wouldn’t otherwise replace their toilets. Low income neighborhoods would be a great place to find households that would not replace toilets until necessary. By sending a representative, this program could educate these neighborhoods of the benefits of upgrading a toilet to a HET, clearly showing how this would pay off in the future. A representative would also ensure that the TOC residents all know that this rebate program exists.
    Looking to the future, I agree that this rebate program should target high-use facilities like sports arenas, schools, and business buildings. These buildings are obviously used by a large portion of the public and would not only save a lot of water but would get the public familiar with using HET toilets. Since this program would benefit the TOC, it would be wise to appeal to public buildings since the government would possibly see the water-saving incentive as a benefit to the town and a good investment for the future.

  25. Margaret Tran

    This topic intrigued me because I recently completed a job with nonprofit The Climate and Energy Project where we were contracted by the State of Kansas to promote a similar rebate on energy audits by making it the main way for residents to help their community win our 9-month energy efficiency competition, the Take Charge Challenge. The element of competition persuaded hundreds of Kansans to take advantage of the rebate, so I’m wondering what kind of promotion was associated with this particular case of the HET Retrofit Rebate Program?

    I’m also wondering if the HET program was found to be cost-effective after its initial year? I ask because even within our 9-month competition, we found that the number of participants in the rebate program slowed because those who signed up for the program at the beginning were a niche group likely to participate since they had already been exposed to energy efficiency issues in the past and were already implementing other energy efficiency practices in their homes. The challenge was reaching a broader audience, educating them about energy efficiency, and convincing them to participate in the rebate program. Did the HET program face a similar situation?

  26. Xiaoyun Dong

    I think a quite important reason why the households wouldn’t replace their toilets might be that the replacing fee is high, probably much more than the $150 rebate. If they replace the toilet, they will spend years to save water and get the money “back”. Replacing a toilet is also troublesome. People have to stay at home and bear the noise and trash produced by replacing the toilet. And some people will have the concern that whether the high efficiency toilets are really efficient. If not, they have to take the risks themselves. People tend to avoid risks if they are not sure whether there are “true” benefits. So, advertising is important, and must be persuasive. It should inform the households that the benefits they gain are more than the costs. Although, this will cost a lot of money, in the long term, I believe that TOC will get significant water quantity benefits from it.

  27. Yilin Xie

    In terms of the second question, the most important thing is to find out why these people choose not to replace their toilets even if they have known the toilets can save water.
    One possible reason is that they think replacing their toilets is unworthy. People often pay more attention to current benefits or costs rather than future’s. Even though we know that future things should be discounted because of time preference, sometimes future benefit can last so long that its accumulated present value can exceed current cost. People should be reminded of this possibility when they are making decisions.
    If unfortunately, this action turns out to be a real unworthy deal for those who merely care about their own balance. Then convincing advertises concerning about environmental benefit of water may become necessary for people to sacrifice their monetary benefit for this invisible benefit.
    Meanwhile, increasing the subsidy is another solution. However, it is not a good way I think.If the government only increases the subsidies that are paid for these people, it is unfair to others who have accepted replacement. If the subsidies are increased for all households, the total amount of money may be too large to afford.
    In conclusion, providing sufficient information may be a feasible way to reverse these people’s ideas.

  28. Keith Carlisle

    Concerning question 2, some people have suggested outreach and education in order to convince residents of TOC of the benefits of purchasing an HET toilet. It may very well be the case that many of the people who buy new toilets as a result of an effective education campaign would do so even if there were no rebate (in other words, because the education campaign sold them on the environmental benefits and future cost savings). The water savings benefits coming from those households would not be attributable to the rebate program, but rather to the education program (which would definitely have its own costs).

    In terms of how to come up with a more tailored way to target people who would otherwise not be buying a new HET toilet, I agree with those who’ve suggested looking at any demographic information available from the survey responses and drawing conclusions. I wonder, though, how limiting a rebate to certain groups, while excluding others would play out in TOC. What if, for example, your demographic analysis shows that the households that are less likely to purchase a new HET toilet in the absence of the rebate program are upper-middle class (ethically challenged lawyers, etc.), while lower income households (such as environmentally conscious but poor Nicholas School graduates) would’ve bought the HET toilet anyway?

  29. Terrence Molinari

    The follow is a strategy to incentivize households that wouldn’t otherwise replace their toilets with High Efficiency Toilets (HEF). I propose the town of Cary to take the total sum of rebates they were planning to give out and create a service company that leases out low-flow toilets. This company would install toilets for free, charge for any damages done to the toilet by the lessee, and would put the onus of maintenance on the homeowner. The service company would have to install monitors on their toilets to track the number of flushes in order to determine how much to charge. The newly formed service company would take the difference between what the homeowner would have paid the water utility without the upgrade and what they are paying now. Simply put: the homeowner still pays at the inefficient rate, but the balance goes to the service company. There should be a contract between the homeowner and the service company that explicitly lays out a time-line and fees for pulling out of the agreement. I am not totally convinced that toilets could become the next thing in the service industry, but hey it’s an option.

  30. Aimee Jia

    A survey about whether a household is willing to replace their toilets might be helpful, but the survey could be very costly, and the accuracy of results is not guaranteed. In my opinion, the strategy to better target rebates to households that wouldn’t otherwise replace their toilets is to have two sets of rebates. Assume currently there are 80% of households that are not using HET toilets. The first set of rebates could be a smaller amount of money, for example $50, and requires that the toilet project has to be done before June 31, 2012. Then the second set of rebates could be announced after June 31, 2012, and offers a rebate of $100 per toilet. I think those people who have already had plans to replace their toilets would want to have their projects done as quickly as possible, and they would still be happy and incentivized even if the rebate is a smaller amount. Of course, there will be people who don’t originally have plans to replace their toilets but get incentivized by this smaller amount, but it is still a good thing because the government would save money. Assume that after the first period, there are still 50% of households that haven’t replaced their toilets. The government can then announce the new rebate policy, which offers a higher rebates ($100), and those who are originally highly unwilling to replace their toilets will probably be incentivized and get their projects done. The only problem that the government needs to solve for this strategy is to determine how long the first period should be, six months, one year, or two years? I don’t think that this is a perfect strategy, and probably will make some people mad, but it could help increase the cost-effectiveness of the rebate program.

  31. Kimberly Cesafsky

    The conundrum of attaining economic efficiency with the town of Cary and high-efficiency toilets is an interesting one. I agree with the point raised in discussion question two that asks how an analyst might be able to increase efficiency by targeting rebates to population that would not otherwise switch to an HET. One way to go about this could be to conduct a survey before the fact and then send out rebates to eligible or ideal populations. In addition, it might be beneficial to offer the rebates to older residential areas that may not have updates their appliances recently. In this case, the levels of water saved could be greater on average than if the rebates were focused towards neighborhoods of more recent development. It would also be a good plan to offer the rebates to housing development companies. That way, a great deal of high-efficiency units could be installed and a large amount of water saved with relatively little legwork.

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