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Sustainable Water Management Conference

Sustainable Water Management Conference. Denver, Colorado March 31, 2014 Presentation by Jack C. Kiefer , PhD. Water Demand Forecasting in Uncertain Times: Isolating the Effects of the Great Recession WRF Project #4458. Jack C. Kiefer, PhD. Overview.

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Sustainable Water Management Conference

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  1. Sustainable Water Management Conference Denver, Colorado March 31, 2014 Presentation by Jack C. Kiefer, PhD

  2. Water Demand Forecasting in Uncertain Times: Isolating the Effects of the Great RecessionWRF Project #4458 Jack C. Kiefer, PhD

  3. Overview • Project goals, objectives, and principal tasks • Progress and selected findings to date • Great Recession • Utility Survey • Analysis of utility data • Next steps

  4. Principal Research Themes and Objectives Economic Reasoning and Water Demand Pathways Assess how water demand is affected by short-term economic shocks and through which economic channels • Prepare White Paper on Macro-Economic Linkages to Water Demand • Conduct Survey of Utility Experiences

  5. Principal Research Themes and Objectives Enhancing the Quality and Effectiveness of Water Demand Forecasts Analyze how water utilities may be better able to anticipate, adapt to, and minimize impacts of future economic cycles on water demand planning • Formulate Models for Use in Forecasting • Recommend Methods and Future Research

  6. What do we know about the economy and water use? • Water use is influenced by economic factors • Municipally-supplied water is a “normal good” — higher (lower) household incomes increase (decrease) demand • Production of goods and services requires water as a direct or indirect input

  7. Direct Economic Pathways of Influence Source: original construct by Jack C. Kiefer (2013)

  8. Defining a Recession • The National Bureau of Economic Research (NBER) Business Cycle Dating Committee: “Asignificant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.” Two consecutive quarters of negative growth in gross domestic product sufficient but not necessary condition

  9. Qualities and Characteristics of the “Great Recession” • “Great Recession” lasted 18 months from peak to trough • December 2007 — June of 2009 • Longest in official duration and (arguably) the most severe recession since the Great Depression (which lasted 43 months)

  10. Qualities and Characteristics of the “Great Recession” • Real household mean income  11.1% • Real household median income  7.7% • Median family net worth  38.8% • Real GDP  5.1% • Unemployment rate 100% • Under-employment rate 100% Source of statistics: Federal Reserve System Board of Governors (2012)

  11. Qualities and Characteristics of the “Great Recession” Source of statistics: Federal Housing and Finance Agency; Department of Commerce, US Census Bureau

  12. Qualities and Characteristics of the “Great Recession” Source of statistics: Federal Reserve System Board of Governors

  13. Qualities and Characteristics of the “Great Recession” Source of statistics: Federal Reserve System Board of Governors

  14. Qualities and Characteristics of the “Great Recession” Source of statistics: Thomson Reuters/University of Michigan Surveys of Consumers

  15. Macroeconomic Pathways and Indicators

  16. Majority of survey sample experienced declines in water use

  17. Reported decreases in use suggest a considerable range of impacts

  18. Observed declines in demand associated with many factors

  19. Majority of utilities reporting a decrease in water use have not fully recovered

  20. The recent economic downturn affected planned investments for some utilities

  21. Majority of respondents expect flat or continuing declines in demand

  22. Trends in use prior to the Great Recession

  23. ~15% drop

  24. Interim Observations • Firm conceptual basis for linking economic activity to water use • Water use was impacted (reduced) during and after the recession for many water providers • Some declines in water sales were large in some places • There were multiple reported manifestations of impacts (on revenue, customer base and other) • Historical time series data show the association of declining sales with recession and economic indicators • Must attempt to differentiate or account for the effects of other factors

  25. Current and Future Activities • Search for and collect additional data for economic indicators • Especially “leading” indicators • Regional indicators where available • Statistical modeling • Regression • Time-series econometrics • Reporting • Communication

  26. American Water Works Association Maureen Hodgins, Water Research Foundation Other research team members Grace Johns (Hazen and Sawyer) Snaith Economic Advisory Services Ben Dziegielewski Thanks! • Utilities • Tampa Bay Water • San Diego County Water Authority • Fairfax Water (VA) • San Antonio Water System • New York City Department of Environmental Protection • City of Phoenix • Miami-Dade County • Anderson Regional Joint Water System (SC) Jack C. Kiefer, Ph.D. jkiefer@hazenandsawyer.com 618.889.0498

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