economic and fiscal impacts of the proposed regulation to ... · pdf...

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EconomicandFiscalImpactsoftheProposedRegulationtoPermanentlyProhibitCertainWastefulWaterUsePractices

AttachmenttoSTD399

MadaleneRansomandCharlotteElyOfficeofResearch,PlanningandPerformance

StateWaterResourcesControlBoardMadalene.Ransom@[email protected]

11/1/2017

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ContentsTheProposedTextoftheRegulation..............................................................................................................................4

SectionI.Background..........................................................................................................................................................11

RegulatoryContext..........................................................................................................................................................11

PurposeofthisDocument.............................................................................................................................................13

SectionII.StandardForm399..........................................................................................................................................14

EconomicImpactStatement:supplement..............................................................................................................19

EstimatedPrivateSectorCostsImpacts.............................................................................................................19

EstimatedCosts............................................................................................................................................................24

EstimatedBenefits.......................................................................................................................................................28

AlternativestotheRegulation................................................................................................................................30

MajorRegulations........................................................................................................................................................32

FiscalImpactStatement.................................................................................................................................................33

FiscalEffectonLocalGovernment........................................................................................................................33

FiscalEffectonStateGovernment........................................................................................................................34

SectionIII.MethodsandAssumptions.........................................................................................................................35

“Annual”watersavings..................................................................................................................................................35

EstimatingAnnualWaterSavings..............................................................................................................................35

AnalyticalBaseline...........................................................................................................................................................39

SampleofUrbanWaterManagementPlans..........................................................................................................40

AdjustmentFactor............................................................................................................................................................42

Nozzles..................................................................................................................................................................................42

Restaurants.........................................................................................................................................................................44

HotelsandMotels.............................................................................................................................................................44

Medians.................................................................................................................................................................................44

Otherwastefuloutdoorwateruse.............................................................................................................................45

LandscapeIrrigationBusinesses................................................................................................................................46

Fountains..............................................................................................................................................................................47

Penalties...............................................................................................................................................................................48

Enforcement.......................................................................................................................................................................48

Percentagepublicandprivateurbanwatersuppliers......................................................................................49

RevenueLosses.................................................................................................................................................................49

VariableCostSavings......................................................................................................................................................50

OffsetDemandSavings...................................................................................................................................................50

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Adjustedservicecharges...............................................................................................................................................52

One‐timeSurcharges.......................................................................................................................................................52

CitedWorks..............................................................................................................................................................................54

ListofTables

Table1:Costssummary......................................................................................................................................................19Table2:Numberofbusinesses........................................................................................................................................19Table3:Lifetimecostsoftheregulation......................................................................................................................24Table4:Firstyear,directeconomiccosts...................................................................................................................25Table5:Secondyear,directeconomiccosts..............................................................................................................25Table6:Typicalbusinesscosts........................................................................................................................................26Table7:Initialcostsforanindividual...........................................................................................................................26Table8:Lifetimedirect,economicbenefitoftheproposedregulation..........................................................29Table9:Direct,Fiscalcosts...............................................................................................................................................33Table10:Direct,FiscalBenefits......................................................................................................................................34Table11:StatewideWaterConservationbyhydrologicregion(June2014‐April2017).......................35Table12:Hypotheticalexampleofthevariousstagesofwatershortagecontingencyplans...............37Table13:PercentageofsampledsupplierswithPlansincludingequivalentprohibitions....................38Table14:WinterWaterSavingsduetotheno‐irrigating‐when‐it’s‐rainingprohibition........................38Table15:Quartileselectionmethod.............................................................................................................................40Table16:UrbanWaterSupplierswhosePlanstheStateWaterBoardreviewed......................................41Table17:InferenceAdjustmentFactor........................................................................................................................42Table18:EstimatedNozzleCosts...................................................................................................................................43Table19:MedianSupplierRevenueLossbyHydrologicRegion......................................................................49Table20:VariableCostSavingsbyHydrologicRegion.........................................................................................50Table21:Suppliersavingsrelativetosupplierproduction.................................................................................51Table22:OffsetDemandSavingsbyHydrologicRegion......................................................................................52

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TheProposedTextoftheRegulationTitle23.Waters

Division3.StateWaterResourcesControlBoardandRegionalWaterQualityControlBoards

Chapter2.AppropriationofWater

Article22.PreventionofWasteandUnreasonableUse

Chapter3.DeterminationofRighttotheUseofWater

Article2.AdjudicationsUnderWaterCodeSections2500Through2900

Chapter3.5.ConservationandthePreventionofWasteandUnreasonableUse

Article1.PreventionofWasteandUnreasonableUse

§955.ClaimstoWaterSuppliedbyDistrictorWaterCompany.[Renumbered]§855.§955.PolicyandDefinition.(a)Ininvestigatinganyusesofwaterandmakingthedeterminationsrequiredbythisarticle,theboardshallgiveparticularconsiderationtothereasonablenessofuseofreclaimedwaterorreuseofwater.(b)Asusedinthisarticle,“misuseofwater”or“misuse”meansanywaste,unreasonableuse,unreasonablemethodofuse,orunreasonablemethodofdiversionofwater.Authoritycited:Section1058,WaterCode.Reference:Sections100,275,1240,1251,1253and1257,WaterCode;andSection2,ArticleX,CaliforniaConstitution.§956.DividedInterests.[Renumbered]§856.§956.Investigations.Theboardstaffshallinvestigateanallegationofmisuseofwater:(1)whenaninterestedpersonshowsgoodcause,or(2)whentheboarditselfbelievesthatamisusemayexists.Authoritycited:Section1058,WaterCode.Reference:Sections100,183,275and1051,WaterCode;andSection2,ArticleX,CaliforniaConstitution.§957.UndividedInterests.[Renumbered]§857.§957.Notifications,HearingsandOrders.(a)Iftheinvestigationindicatesthatamisuseofwaterhasoccurred,theboardstaffshallnotifyinterestedpersonsandallowareasonableperiodoftimeinwhichtoterminatesuchmisuseordemonstratetothesatisfactionoftheboardstaffthatmisusehasnotoccurred.(b)Attheendofthetimesetbytheboardstaff,anduponapplicationofanyinterestedpersonoruponitsownmotion,theboardmayholdahearingtodetermineifmisusehasoccurredorcontinuestooccur.(c)Ifthemisuseisallegedtohaveoccurredortocontinuetooccurinconnectionwithexerciseofrightsevidencedbyapermitorlicenseissuedbytheboard,theboardshallnoticethehearingasapermitrevocationhearingpursuanttoWaterCodeSection1410.1,orasalicenserevocation

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hearingpursuanttoWaterCodeSection1675.1,asappropriate;orasapreliminaryceaseanddesistorderhearingpursuanttoWaterCodeSection1834.(d)Theboardmayissueanorderrequiringpreventionorterminationthereof.Authoritycited:Section1058,WaterCode.Reference:Sections100,275,183,1051,1401,1675.1and1834,WaterCode.§958.GeneralRequirementsforProofsofClaims.[Repealed]§858.§958.NoncompliancewithOrderRegardingMisuseUnderWaterRightEntitlement.IfapermitteeorlicenseedoesnotcomplywithanyorderissuedpursuanttoSection857957withinsuchreasonableperiodoftimeasallowedbytheboard,orsuchextensionthereofasmayforgoodcausebeallowedbytheboard,andifsuchorderincludesafindingthatwaste,unreasonableuse,methodofuse,ormethodofdiversionhasoccurredinconnectionwithexerciseofarightevidencedbyapermitorlicenseissuedbytheboard,arevocationactionmaybecommencedbytheboard:(a)Ifthehearinghasbeennoticedasapermitorlicenserevocationhearing,andiftheboardfindsthatmisusehasoccurredorcontinuestooccur,theboardmayorderthepermitorlicenserevokedorimposeappropriateadditionaloramendedtermsorconditionsontheentitlementtopreventrecurrenceofthemisuse;(b)IfthehearingpursuanttoSection857957hasbeennoticedasapreliminaryceaseanddesistorderhearing,andiftheboardfindsthatmisusehasoccurredorcontinuestooccur,theboardmayissueapreliminaryceaseanddesistorder.Authoritycited:Section1058,WaterCode.Reference:Sections1410,1675and1831,WaterCode.§959.SpecificRequirementsforIrrigationProofs.[Repealed]§859.§959.NoncompliancewithOtherOrder.IfapersonotherthanapermitteeorlicenseedoesnotcomplywithanyorderissuedpursuanttoSection857957withinsuchreasonableperiodoftimeasallowedbytheboard,orsuchextensionthereofasmayforgoodcausebeallowed,andifsuchorderincludesafindingthatsuchpersonhasmisusedorcontinuestomisusewater,theboardmayrequestappropriatelegalactionbytheAttorneyGeneral.Authoritycited:Section1058,WaterCode.Reference:Section275,WaterCode.§960.UsesOtherthanIrrigation.[Repealed]§860.§960.AlternativeProcedure.Theprocedureestablishedinthisarticleshallbeconstruedasalternativeto,andnotexclusiveof,theproceduresestablishedinChapter5ofTitle23,CaliforniaAdministrativeCode,inaccordancewithSection4007therein.Authoritycited:Section1058,WaterCode.Reference:Section275,WaterCode.§961.SignatureofDeponent.[Renumbered]§962.Objections.[Renumbered]

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§862.§962.RussianRiver,Special.BuddinggrapevinesandcertainothercropsintheRussianRiverwatershedmaybeseverelydamagedbyspringfrosts.Frostprotectionofcropsisabeneficialuseofwaterundersection671ofthischapter2ofthisdivision.Duringafrost,however,thehighinstantaneousdemandforwaterforfrostprotectionbynumerousvineyardistsandotherwaterusersmaycontributetoarapiddecreaseinstreamstagethatresultsinthemortalityofsalmonidsduetostranding.Strandingmortalitycanbeavoidedbycoordinatingorotherwisemanagingdiversionstoreduceinstantaneousdemand.Becauseareasonablealternativetocurrentpracticesexists,theBoardhasdeterminedthesediversionsmustbeconductedinaccordancewiththissection.(a)AfterMarch14,2012,exceptfordiversionupstreamofWarmSpringsDaminSonomaCountyorCoyoteDaminMendocinoCounty,anydiversionofwaterfromtheRussianRiverstreamsystem,includingthepumpingofhydraulicallyconnectedgroundwater,forpurposesoffrostprotectionfromMarch15throughMay15,shallbedivertedinaccordancewithaboardapprovedwaterdemandmanagementprogram(WDMP).Forpurposesofthissection,groundwaterpumpedwithintheRussianRiverwatershedisconsideredhydraulicallyconnectedtotheRussianRiverstreamsystemifthatpumpingcontributestoareductioninstreamstagetoanysurfacestreamintheRussianRiverwatershedduringanysinglefrostevent.(b)ThepurposeoftheWDMPistoassesstheextenttowhichdiversionsforfrostprotectionaffectstreamstageandmanagediversionstopreventcumulativediversionsforfrostprotectionfromcausingareductioninstreamstagethatcausesstrandingmortality.TheWDMP,andanyrevisionsthereto,shallbeadministeredbyanindividualorgoverningbody(governingbody)capableofensuringthattherequirementsoftheprogramaremet.AnyWDMPdevelopedpursuanttothissectionshallbesubmittedtotheboardbyFebruary1priortothefrostseason.(c)Ataminimum,theWDMPshallinclude(1)aninventoryofthefrostdiversionsystemswithintheareasubjecttotheWDMP,(2)astreamstagemonitoringprogram,(3)anassessmentofthepotentialriskofstrandingmortalityduetofrostdiversions,(4)theidentificationandtimelinesforimplementationofanycorrectiveactionsnecessarytopreventstrandingmortalitycausedbyfrostdiversions,and(5)annualreportingofprogramdata,activities,andresults.Inaddition,theWDMPshallidentifythedivertersparticipatingintheprogramandanyknowndiverterswithintheareasubjecttotheWDMPwhodeclinedtoparticipate.TheWDMPalsoshallincludeascheduleforconductingthefrostinventory,developingandimplementingthestreamstagemonitoringprogram,andconductingtheriskassessment.(1)Inventoryoffrostdiversionsystems:ThegoverningbodyshallestablishaninventoryofallfrostdiversionsincludedintheWDMP.Theinventory,exceptfordiversiondata,shallbecompletedwithinthreemonthsafterboardapprovalofaWDMP.Theinventoryshallbeupdatedannuallywithanychangestotheinventoryandwithfrostdiversiondata.Theinventoryshallincludeforeachfrostdiversion:

(A)Nameofthediverter;(B)Sourceofwaterusedandlocationofdiversion;(C)Adescriptionofthediversionsystemanditscapacity;(D)AcreagefrostprotectedandacresfrostprotectedbymeansotherthanwaterdivertedfromtheRussianRiverstreamsystem;and(E)Therateofdiversion,hoursofoperation,andvolumeofwaterdivertedduringeachfrosteventfortheyear.

(2)Streamstagemonitoringprogram:ThegoverningbodyshalldevelopastreamstagemonitoringprograminconsultationwithNationalMarineFisheriesService(NMFS)andCaliforniaDepartmentofFishandGame(DFG).Forthepurposesofthissection,consultationinvolvesanopenexchangeofinformationforthepurposesofobtainingrecommendations.Thegoverningbodyisauthorizedtoincludeitsownexpertscientistsandengineersintheconsultation,andrequestboardstafftoparticipate,whendesired.Thestreamstagemonitoringprogramshallincludethefollowing:

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(A)Adeterminationofthenumber,type,andlocationofstreamgagesnecessaryfortheWDMPtomonitorandassesstheextenttowhichfrostdiversionsmayaffectstreamstageandcausestrandingmortality;(B)Adeterminationofthestreamstagethatshouldbemaintainedateachpagetopreventstrandingmortality;(C)Provisionsfortheinstallationandongoingcalibrationandmaintenanceofstreamgages;and(D)Monitoringandrecordingofstreamstageatintervalsnottoexceed15minutes.

(3)Riskassessment:Basedontheinventoryandstreamstageinformationdescribedabove,andinformationregardingthepresenceofhabitatforsalmonids,thegoverningbodyshallconductariskassessmentthatevaluatesthepotentialforfrostdiversionstocausestrandingmortality.TheriskassessmentshallbeconductedinconsultationwithNMFSandDFG.Thegoverningbodyisauthorizedtoincludeitsownexpertscientistsandengineersintheconsultation,andrequestboardstafftoparticipate,whendesired.Theriskassessmentshallbeevaluatedandupdatedannually.(4)CorrectiveActions:Ifthegoverningbodydeterminesthatdiversionsforpurposesoffrostprotectionhavethepotentialtocausestrandingmortality,thegoverningbodyshallnotifythediverter(s)ofthepotentialrisk.Thegoverningbody,inconsultationwiththediverters,shalldevelopacorrectiveactionplanthatwillpreventstrandingmortality.Correctiveactionsmayincludealternativemethodsforfrostprotection,bestmanagementpractices,bettercoordinationofdiversions,constructionofoffstreamstoragefacilities,real‐timestreamgageanddiversionmonitoring,orotheralternativemethodsofdiversion.Correctiveactionsalsomayincluderevisionstothenumber,locationandtypeofstreamstagemonitoringpages,ortothestreamstagesconsiderednecessarytopreventstrandingmortality.Indevelopingthecorrectiveactionplanthegoverningbodyshallconsidertherelativewaterrightprioritiesofthedivertersandanytimedelaybetweengroundwaterdiversionsandareductioninstreamstage.Thecorrectiveactionplanshallincludeascheduleofimplementation.Totheextentfeasible,thecorrectiveactionplanshallincludeinterimcorrectiveactionsiflong‐termcorrectiveactionsareanticipatedtotakeoverthreeyearstofullyimplement.Thedivertersshallimplementcorrectiveactionsinaccordancewiththecorrectiveactionplan,orceasedivertingwaterforfrostprotection.(5)AnnualReporting:Thegoverningbodyshallsubmitapublicallyavailableannualreportofprogramoperations,riskassessment,andcorrectiveactionsbySeptember1followingthefrostseasonthatisthesubjectofthereport.Thereportshallinclude:

(A)Thefrostinventory,includingdiversiondata.(B)Streamstagemonitoringdata.(C)Theriskassessmentanditsresults,identificationoftheneedforanyadditionaldataoranalysis,andascheduleforobtainingthedataorcompletingtheanalysis.(D)Adescriptionofanycorrectiveactionplanthathasbeendeveloped,anycorrectiveactionsimplementedtodate,andascheduleforimplementinganyadditionalcorrectiveactions.(E)AnyinstancesofnoncompliancewiththeWDMPorwithacorrectiveactionplan,includingthefailuretoimplementidentifiedcorrectiveactions.ThereportshalldocumentconsultationswithDFGandNMFSregardingthestreamstagemonitoringprogramandriskassessmentandshallexplainanydeviationsfromrecommendationsmadebyDFGorNMFSduringtheconsultationprocess.Inaddition,theannualreportshallevaluatetheeffectivenessoftheWDMPandrecommendanynecessarychangestotheWDMP,includinganyproposedadditionsorsubtractionsofprogramparticipants.AnyrecommendationsforrevisionstotheWDMPshallincludeaprogramimplementationplanandschedule.TheboardmayrequirechangestotheWDMP,includingbutnotlimitedtotheriskassessment,correctiveactionplan,andscheduleofimplementation,atanytime.

(d)ThegoverningbodymaydevelopandsubmitfortheDeputyDirectorforWaterRights'approval,criteria,applicabletoanyparticipantinitsWDMP,foridentifyinggroundwaterdiversionsthatarenothydraulicallyconnectedtotheRussianRiverstreamsystem.Thegoverningbodymay

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submittotheDeputyDirectoralistofgroundwaterdivertersthatappeartomeetthesecriteriaandcouldbeexemptedfromthissection.TheDeputyDirectorisauthorizedtoexemptthelistedgroundwaterdiverters,oridentifythereasonfornotexemptingthelistedgroundwaterdiverters.Beginningthreeyearsfromtheeffectivedateofthissection,ifanindividualgroundwaterdivertercanindependentlydemonstratetothesatisfactionoftheDeputyDirectorthatthediversionisnothydraulicallyconnectedtotheRussianRiverstreamsystem,theDeputyDirectorisauthorizedtoexemptthegroundwaterdiverterfromthissection.(e)CompliancewiththissectionshallconstituteaconditionofallwaterrightpermitsandlicensesthatauthorizethediversionofwaterfromtheRussianRiverstreamsystemforpurposesoffrostprotection.Thediversionofwaterinviolationofthissection,includingthefailuretoimplementthecorrectiveactionsincludedinanycorrectiveactionplandevelopedbythegoverningbody,isanunreasonablemethodofdiversionanduseandaviolationofWaterCodesection100,andshallbesubjecttoenforcementbytheboard.Theboardhascontinuingauthoritytorevisetermsandconditionsofallpermitsandlicensesthatauthorizethediversionofwaterforpurposesoffrostprotectionshouldfutureconditionswarrant.Authoritycited:Section1058,WaterCode.Reference:Section2,ArticleX,CaliforniaConstitution;andSections100,275and1051.5,WaterCode.Article2.WastefulandUnreasonableWaterUses

§963.WastefulandUnreasonableWaterUsePractices.TheStateWaterResourcesControlBoard(StateBoard)hasdeterminedthatitisawasteandunreasonableuseofwaterunderArticleX,section2oftheCaliforniaConstitutiontodivertorusewaterinconsistentwithsubdivision(a)regardlessofwaterrightseniority,giventheneedforthewatertosupportothermorecriticaluses.(a)Asusedinthisarticle:

(1)“CommercialagriculturalusemeetingthedefinitionofGovernmentCodesection51201,subdivision(b)”includesirrigation,frostprotectionandheatcontrol,butdoesnotincludecleaning,processingorothersimilarpost‐harvestactivities.

(2)“Totalpotablewaterproduction”meansallpotablewaterthatentersintoawatersupplier’sdistributionsystem,excludingwaterplacedintostorageandnotwithdrawnforuseduringthereportingperiod,orwaterexportedoutsiderthesupplier’sservicearea.

(3)“Urbanwatersupplier”meansasupplierthatmeetsthedefinitionsetforthinWaterCodesection10617,exceptitdoesnotrefertosupplierswhentheyarefunctioningsolelyinawholesalecapacity,butdoesapplytosupplierswhentheyarefunctioninginaretailcapacity.

(4)“Wateryear”meanstheperiodfromOctober1throughthefollowingSeptember30.Whereawateryearisdesignatedbyyearnumber,thedesignationisbythecalendaryearnumberinwhichthewateryearends.

(b)(1)Theuseofwaterisprohibitedasidentifiedinthissubdivisionforanyofthefollowingactions:

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(A)Theapplicationofwatertooutdoorlandscapesinamannerthatcausesrunoffsuchthatwaterflowsontoadjacentproperty,non‐irrigatedareas,privateandpublicwalkways,roadways,parkinglots,orstructures;(B)Theuseofahosethatdispenseswatertowashamotorvehicle,exceptwherethehoseisfittedwithashut‐offnozzleordeviceattachedtoitthatcausesittoceasedispensingwaterimmediatelywhennotinuse;(C)Theapplicationofpotablewaterdirectlytodrivewaysandsidewalks;(D)Theuseofpotablewaterinanornamentalfountainorotherdecorativewaterfeature,exceptwherethewaterispartofarecirculatingsystem;(E)Theapplicationofwatertoirrigateturfandornamentallandscapesduringandwithin48hoursaftermeasurablerainfallofatleastone‐tenthofoneinchofrain.Indeterminingwhethermeasurablerainfallofatleastone‐tenthofoneinchofrainoccurredinagivenarea,enforcementmaybebasedonrecordsoftheNationalWeatherService,theclosestCIMISstationtotheparcel,oranyotherreliablesourceofrainfalldataavailabletotheentityundertakingenforcementofthissubdivision;(F)Theservingofdrinkingwaterotherthanuponrequestineatingordrinkingestablishments,includingbutnotlimitedtorestaurants,hotels,cafes,cafeterias,bars,orotherpublicplaceswherefoodordrinkareservedand/orpurchased;(G)Theirrigationofturfonpublicstreetmediansorpubliclyownedormaintainedlandscapedareasbetweenthestreetandsidewalk,exceptwheretheturfservesacommunityorneighborhoodfunction;and

(2)Notwithstandingsubdivision(b)(1),theuseofwaterisnotprohibitedbythisarticleunderthefollowingcircumstances:

(A)Totheextentnecessarytoaddressanimmediatehealthandsafetyneed.Thismayinclude,butisnotlimitedto,streetsweepingandpressurewashingofpublicsidewalksandtheuseofpotablewaterinafountainorwaterfeaturewhenrequiredbylawtobepotable.(B)Totheextentnecessarytocomplywithatermorconditioninapermitissuedbyastateorfederalagency.(C)WhenthewaterisusedexclusivelyforcommercialagriculturalusemeetingthedefinitionofGovernmentCodesection51201,subdivision(b).

(c)Topromotewaterconservation,operatorsofhotelsandmotelsshallprovideguestswiththeoptionofchoosingnottohavetowelsandlinenslaundereddaily.Thehotelormotelshallprominentlydisplaynoticeofthisoptionineachguestroomusingclearandeasilyunderstoodlanguage. (d)(1)Topreventthewasteandunreasonableuseofwaterandtopromotewaterconservation,anyhomeowners’associationorcommunityserviceorganizationorsimilarentityisprohibitedfrom:

(A)Takingorthreateningtotakeanyactiontoenforceanyprovisionofthegoverningdocumentsorarchitecturalorlandscapingguidelinesorpoliciesofacommoninterestdevelopmentwherethatprovisionisvoidorunenforceableundersection4735,subdivisions(a)and(b)oftheCivilCode;(B)Imposingorthreateningtoimposeafine,assessment,orothermonetarypenaltyagainstanyownerofaseparateinterestforreducingoreliminatingthewateringofvegetationorlawnsduringadeclareddroughtemergency,asdescribedinsection4735,subdivision(c)oftheCivilCode;or(C)Requiringanownerofaseparateinterestuponwhichwater‐efficientlandscapingmeasureshavebeeninstalledinresponsetoadeclareddroughtemergency,asdescribedinsection4735,subdivisions(c)and(d)oftheCivilCode,toreverseorremovethewater‐efficientlandscapingmeasuresupontheconclusionofthestateofemergency.

(2)Asusedinthissubdivision:

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(A)“Architecturalorlandscapingguidelinesorpolicies”includesanyformalorinformalrulesotherthanthegoverningdocumentsofacommoninterestdevelopment.(B)“Homeowners’association”meansan“association”asdefinedinsection4080oftheCivilCode.(C)“Commoninterestdevelopment”hasthesamemeaningasinsection4100oftheCivilCode.(D)“Communityserviceorganizationorsimilarentity”hasthesamemeaningasinsection4110oftheCivilCode.(E)“Governingdocuments”hasthesamemeaningasinsection4150oftheCivilCode.(F)“Separateinterest”hasthesamemeaningasinsection4185oftheCivilCode.

(3)Ifadisciplinaryproceedingorotherproceedingtoenforcearuleinviolationofsubdivision(d)(1)isinitiated,eachdaytheproceedingremainspendingshallconstituteaseparateviolationofthisregulation. (e)Topreventthewasteandunreasonableuseofwaterandtopromotewaterconservation,anycity,county,orcityandcountyisprohibitedfromimposingafineunderanylocalmaintenanceordinanceorotherrelevantordinanceasprohibitedbysection8627.7oftheGovernmentCode.(f)Thetakingofanyactionprohibitedinsubdivision(b)(d)or(e),orthefailuretotakeanyactionrequiredinsubdivision(c),isaninfractionpunishablebyafineofuptofivehundreddollars($500)foreachdayinwhichtheviolationoccurs.Thefinefortheinfractionisinadditionto,anddoesnotsupersedeorlimit,anyotherremedies,civilorcriminal.(g)AdecisionororderissuedunderthisarticlebytheBoardoranofficeroremployeeoftheBoardissubjecttoreconsiderationunderarticle2(commencingwithsection1122)ofchapter4ofpart1ofdivision2oftheWaterCode.Authority: Section1058,WaterCode.References: ArticleX,Section2,CaliforniaConstitution;Sections4080,4100,4110,4150,4185,and4735,CivilCode;Sections102,104,105,275,350,and10617,WaterCode;Lightv.StateWaterResourcesControlBoard(2014)226Cal.App.4th1463.

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SectionI.Background

RegulatoryContext2012through2015areonrecordasCalifornia’sdriestthreeconsecutiveyears.2013wasthedriestsingleyearonrecordfornumerouscommunitiesacrosstheState,triggeringemergencyactionsatStateandlocallevels.Therecentdroughtplacedanevengreateremphasisonurban1waterconservationandefficiency.BeginninginJanuary2014,withtheGovernor’sdroughtemergencyproclamation,aseriesofsuccessiveexecutiveordersdirectedCalifornianstoconservewaterviaemergencyconservationregulations.BetweenJune2014andApril2017,theemergencyregulationsmandatedurbanwaterusereductionsthatresultedintheconservationofover3.5millionacre‐feet.

The2014‐2015drought‐relatedactionsandresponseactivitieswerefollowedbyExecutiveOrders(EO)B‐37‐16inMay2016andB‐40‐17inApril2017.TheEOstaskedStateagencieswithestablishingalong‐termframeworkforwaterconservationanddroughtplanning.TheEOactionsareorganizedaroundfourprimaryobjectives:usingwatermorewisely,eliminatingwaterwaste,strengtheninglocaldroughtresilience,andimprovingagriculturalwateruseefficiencyanddroughtplanning.

Toeliminatewaterwaste,theStateWaterResourceControlBoard(StateWaterBoardorBoard)hasbeendirectedtopermanentlyprohibitpracticesthatwastewater.Thewastefulwaterusesprohibitedbytheproposedregulationbuildontheexistingemergencyconservationregulationsandincludethefollowing:

1. Theapplicationofwatertooutdoorlandscapesinamannerthatcausesrunoffsuchthatwaterflowsontoadjacentproperty,non‐irrigatedareas,privateandpublicwalkways,roadways,parkinglots,orstructures;

2. Theuseofahosethatdispenseswatertowashamotorvehicle,exceptwherethehoseisfittedwithashut‐offnozzleordeviceattachedtoitthatcausesittoceasedispensingwaterimmediatelywhennotinuse;

3. Theapplicationofpotablewatertodrivewaysandsidewalks;4. Theuseofpotablewaterinanornamentalfountainorotherdecorativewater

feature,exceptwherethewaterispartofarecirculatingsystem;5. Theapplicationofwatertoirrigateturfandornamentallandscapesduringand

within48hoursaftermeasurablerainfallofatleastone‐tenthofaninch;6. Theservingofdrinkingwaterotherthanuponrequestineatingordrinking

establishments,includingbutnotlimitedtorestaurants,hotels,cafes,cafeterias,bars,orotherpublicplaceswherefoodordrinkareservedand/orpurchased;

7. Theirrigationofturfonpublicstreetmediansorpublicallyownedormaintainedlandscapedareasbetweenthestreetandsidewalk,exceptwheretheturfservesacommunityorneighborhoodfunction.

1Thisregulationwouldnotaffectagriculturalwateruses.

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TheproposedregulationalsorequiresspecificactionsoftheCommercial,Industrial,andInstitutional(CII)sector:

8. Hotelsandmotelsmustprovideguestswiththeoptionofhavingtowelsandlinenslaundered,andprominentlydisplaythisoption.

Theproposedregulationalsoprohibitsspecificactionsoflocalagenciesandhomeowners’associations:

9. Cities,counties,andcitiesandcountiesmaynotpreventorpunishresidentsforwaterconservationinviolationofexistingstatutes;

10. Homeowners’associationsmaynotpreventorpunishresidentsforlandscapingthatreduceswateringduringadeclareddroughtemergencyinviolationofexistingstatutesorpreventorpunishresidentsforwaterconservationinviolationofcertainexistingstatutes.

Therearetwoprimaryreasonswhytheproposedregulationisunlikelytoleadtomajorstatewidecosts.First,throughexistingpermitsandpolicies,manyofthestate’surbanareasalreadyaddressthemostwastefuloftheto‐be‐prohibitedpractices,particularlythosepracticespertainingtooutdooruse.Secondly,theproposedregulationisunlikelytocatalyzesubstantialwatersavings,asonlyprohibitingwastefuluseshasbeenshowntoconserverelativelylittlecomparedtootherconservationstrategies.

Type‐of‐use‐restrictions(a.k.a.,prohibitions),withoutaccompanyingchangesinpricing,achievemodestreductions(DixonandMoore1996,OlmsteadandStavins2009,Mini2015,ManagoandHogue2017).Forexample,whentheLosAngelesDepartmentofWaterandPower(LADWP)institutedmandatoryoutdoorwaterrestrictionsin2008,therateofoutdoorwaterusedeclined6percentcomparedtoanaveraged2001‐2007baseline;whenLADWPadditionallyraisedrates,therateofoutdoorusedeclinedbyanaverageof35percentbetween2009and2014(ManagoandHogue2017).

Waterdemandtendstodecreaseaspricesincrease.Ratescanbestrategicallyusedtoinfluencedemand,particularlyoutdoorresidentialdemand,whichismoreelastic(i.e.,moreresponsivetochangesinprice)thanresidentialindoordemand(EpseyandShaw1997,Dalhusien2003,Olmstead2007,Baerenklauetal2013).Theproposedregulationwouldonlyprohibitcertainwastefulwaterusepractices.Becauseitwouldnotalsorequirewateragenciestochangeratesinamannertoincentivizethemandatedconservationpractices,theanalysisassumestheprohibitionsthemselveswillnotleadtomajorsavings.

Theproposedregulationwouldnothaveamajoreconomicimpact.Prohibitingtheaforementionedwastefulwaterusepracticeswouldresultinannualwatersavingsof12,489acrefeetperyear,or0.21percentofthenearly6millionacrefeeturbanwatersuppliersproducedbetweenJune2014andMay2015(SWRCBReportingdatabase2017).Usingthesesavingsasthefoundationofitsanalysis,theStateWaterBoardestimatestheproposedregulationwould,initsmostexpensiveyear,resultindirecteconomicandfiscal

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costsof$2,313,022and$11,747,147respectively.Thehighestone‐timecosttoahouseholdwouldbe$1.12.TheWaterBoardestimatesthemaximumdirecteconomicandfiscalbenefitswouldbe$8,790,771and$6,508,912respectively.Whileitseconomicimpactissmall,theproposedregulationrepresentsanecessaryandpracticalstepforward.Seetheassociatedregulatoryandenvironmentaldocumentsforananalysisoftheregulation’snon‐economicimpacts.

PurposeofthisDocumentGovernmentCodeSections11346.2,11346.3,11346.5andHealthandSafetyCodesection57005establishrequirementsforassessingtheestimatedeconomicimpactofaproposedregulation.Sections6600through6615oftheCaliforniaStateAdministrativeManual(SAM)describethecorrespondingstatuaryrequirementsfortheDepartmentofFinanceStandardForm399(Form399).PursuanttostatutoryrequirementsandinaccordancewithSAMguidance,theStateWaterBoardhaspreparedaForm399.ThepurposeofthisdocumentistoprovidesupplementalinformationfortheForm399.InSectionII,theStateWaterBoardincludesthecompletedForm399,andprovidesadditionalinformationtoanswereachoftherequisitequestions.InSectionIII,theStateWaterBoarddescribesthemethodsusedtoestimatedirectandtotalcostsandbenefits.SectionIIIalsooutlinestheassumptionsmadeintheanalysis.

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SectionII.StandardForm399

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EconomicImpactStatement:supplement

EstimatedPrivateSectorCostsImpacts

A.1‐Thefollowingprivatesectorbusinessesmaybeimpacted:

Businessesimpacted:Privateurbanwatersuppliers;hotelsandmotels;andrestaurants.

Smallbusinessesimpacted:Hotels&motels;restaurants;andlandscapebusinesses.

Jobsandoccupationsimpacted:Landscapeirrigationprofessionals

Individualsimpacted:Customersofurbanwatersuppliers

A.2–TheStateWaterBoardestimatesthedirecteconomicimpactoftheproposedregulationwillbe$14,060,169.TheBoardusedthisvalueinselectingtheSTD.399’s"Between$10and$25million"category.

TheStateWaterBoardestimatedthedirecteconomiccostsbysummingthefirstyeareconomiccostsandbenefits.WesummarizethoseimpactsinTable1.

TotalDirectCosts,Year1(2015dollars)Calculationsaredisplayedasintegers,differencesareduetorounding.

Supplier(PublicandPrivate)Costs,Year1 Total Fiscal Economic

GrossRevenueLoss,Year1only(CustomersarechargedinYear2) $13,721,641 $11,675,137 $2,046,504

Nozzles,Year1only $84,632 $72,010 $12,622

CustomerCosts,Year1

Nozzles,Year1only $253,896 $0 $253,896

TotalDirectCosts,Suppliers+Customers,Year1 $14,060,169 $11,747,147 $2,313,022

Table1:Costssummary

A.3.1–Numberofbusinessesimpacted:Totalbusinessesimpacted=10,361.

TypeofBusiness NumberPrivateUrbanWaterSuppliers 61Restaurants,FullService 8,179(Censusa,2015)Hotelsandmotels 2,121(Censusb,2015)Landscapeirrigationbusinesses UnknownTotalNumbers 10,361

Table2:Numberofbusinesses

A.3.2–Thetypesofbusinessesthatmaybeimpactedbythisregulationincludehotelsandmotels,privateurbanwatersuppliers,landscapebusinesses,andrestaurants.

A.3.3‐Percentageoftotalbusinessesimpactedthataresmallbusinesses.AccordingtotheCaliforniaDepartmentofGeneralServices(DGS),asmallbusinessemploysnomorethan100peopleandhasaverageannualgrossreceiptsof$15millionorless.TheWaterBoardcalculatedthepercentvaluesbydividingby40thenumberofUWMPswithprohibitions

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relevanttothebusinesstype(SeeSampleofUrbanWaterManagementPlans).TheWaterBoardindicated0%oftheurbanwatersupplierswouldbeimpactedbecausenonemeettheDGSdefinitionofasmallbusiness.

Typeofbusiness PercentimpactedPrivateUrbanWaterSuppliers 0%Restaurants,FullService 20%Hotels 35%

Landscapebusinesses 82.5%

A.4–TheStateWaterBoardassumesnobusinesseswouldbecreatedoreliminatedbytheproposedregulation.

Hotels&Motelswouldbeaffectedbytherequirementthatthey“provideguestswiththeoptionofhavingtowelsandlinenslaundered,andprominentlydisplaythisoption.”However,thisrequirementdoesnotcreateamarketnichethatwouldencourageentrynordoesitimposecostshighenoughtoencourageexit.TheStateWaterBoardassumesthisparticularrequirementisextremelyunlikelytocreateoreliminateanyhotelormotel.TheHotelsandMotelssub‐sectioninSectionIII.MethodsandAssumptions,infra,providesfurtherjustificationforthisconclusion.

Privately‐ownedurbanwatersupplierswouldnotbecreatedoreliminatedduetothisregulation.Thecostsprivately‐ownedurbanwatersupplierswouldincurasaresultoftheproposedregulationare1)minorand2)passedontocustomers.Thus,thereisverylittle,ifany,riskthattheprofitabilityofprivatelyheldwatersupplierswouldbeaffectedbytheproposedregulationtotheextentthatanynewsupplierwouldentertheeconomyoranexistingsupplierwouldleavetheeconomy.

Restaurantswouldbeaffectedbytheprohibitionagainst“theservingofdrinkingwaterotherthanuponrequestineatingordrinkingestablishments….”TheStateWaterBoardassumesthisparticularprohibitionisextremelyunlikelytocreateoreliminateany“restaurant,hotel,cafe,cafeteria,bar,orotherpublicplacewherefoodordrinkareservedand/orpurchased.”Thecosts,ifany,ofcomplyingwiththeprohibitionaretoosmalltoencourageexit.Thebenefits(potentialsavingsduetoenergyandwaterconservation)aresimilarlylikelytoosmalltoencourageentry.Thus,theBoardassumesthisparticularrequirementisextremelyunlikelytocreateoreliminateanyrestaurant.TheRestaurantssub‐sectioninSectionIII.MethodsandAssumptions,infra,providesfurtherjustificationforthisconclusion.

LandscapeBusinessesandrelatedindustriesmaybeimpacted,buttheStateWaterBoardlacksavailabledatatoestimatetheseimpacts.Thefollowingprohibitionsmayaffectlandscapebusinesses:

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• Theapplicationofwatertooutdoorlandscapesinamannerthatcausesrunoffsuchthatwaterflowsontoadjacentproperty,non‐irrigatedareas,privateandpublicwalkways,roadways,parkinglots,orstructures;

• Theapplicationofwatertoirrigateturfandornamentallandscapesduringandwithin48hoursaftermeasurablerainfallofatleastone‐tenthofaninch;

• Theirrigationofturfonpublicstreetmediansorpublicallyownedormaintainedlandscapedareasbetweenthestreetandsidewalk,exceptwheretheturfservesacommunityorneighborhoodfunction.

AnychangesinthelandscapeindustrywoulddependgreatlyonhowCaliforniansrespond.AsdescribedintheMediansandOtherwastefuloutdoorwaterusesub‐sectionsinSectionIII.MethodsandAssumptions,infra,Californiansmayrespondinavarietywaystoeachoftheprohibitions(e.g.,bylettingthelawnbrown,byadjustingawastefulirrigationsystem,byhiringaprofessionaltoadjustawastefulirrigationsystem,etc.).

Giventhesemultiplepathwaystocompliance,theStateWaterBoardconsideredimpactstothefollowingbusinesstypes:

Sodfarmers:Ifasubstantialpercentageofthoseagenciesthatmanagepubliclyowned,turf‐onlymediansopttoreplacewater‐intensiveturfwithavarietythatneedsnoirrigation,sodgrowersmaybecompelledtoshiftproductiontoamoredrought‐tolerant(i.e.,requiringnoirrigation)turftype.

Xeriscapenurseries:Thoughreplacementofexistinglandscapeswouldnotberequiredbytheproposedregulation,somewaterusersmaychoosetocomplybyreconfiguringtheiroutdoorlandscapetopreventrunoffaswellastoachievegeneraloutdoorwatersavings.Iftheprohibitionscompelenoughpeopletoreplaceturfwithwaterefficientplants,nurseriesspecializinginthoseplanttypesmayexperienceanincreaseindemand.

Landscapebusinesses:Thoselandscapebusinessesthatprovideirrigationequipmentandservices(includingirrigationinstallation,repair,andmaintenance)mayexperienceanincreaseddemandinordertoimproveorreplaceexistingirrigationsystems.

Aspreviouslystated,thepotentialimpactoftheproposedregulationonlandscapebusinessesandrelatedindustrieswilldependonhowCaliforniansrespondtotheprohibitions.BecausetheStateWaterBoard1)lacksdataenablingittospeculatewhatresponsesmaybecatalyzedbytheprohibitions,and2)lackssufficientindustrydata(suchasthenumberandtypesoflandscapebusinesses)toperformanypotentialresponsiveactions,theBoardwasunabletoconstructareasonablesetofassumptionstoestimatethenumberofbusinessesthatwouldbecreatedoreliminated.BasedonavailabledataandresponsesduringthependencyoftheBoard’semergencyregulations,theBoardassumesthatthereareunlikelytobeanybusinesseseliminatedorcreatedingeneral.Somebusinessesmayshifttheirfocustoaccommodatebehavioralchangesspurredbythe

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prohibitions.Behavioralchangesbywaterusersarelikelytofallwithintherangeofofferedservicesandexpertiseofexistingbusinessesandnotnecessitatesignificantchangesevenwithinexistingbusinesses,letalonesector‐wide.

However,theStateWaterBoardcanreasonablyassumeanyimpactstothissectorfromtheaforementionedprohibitionsarelikelytobebeneficial.Ina2015documentpreparedfortheBoard,ExecutiveOrderB‐29‐15StateofEmergencyDuetoSevereDroughtConditions:EconomicImpactAnalysis,theauthorsfindthatexpenditurestousewatermoreefficientlyoutdoorswillbenefitthelandscapingsectorbyhelpingto“catalyzeanew,droughtorientedsub‐sectorofthelandscapingservicessector...”

A.5–Thegeographicextentofimpactsisstatewide.TheregulationappliestoallCalifornians.

A.6–TheStateWaterBoardassumesnojobswouldbecreatedoreliminatedbytheproposedregulation.Ingeneral,thedescriptionsinA.4alsoapplytothissection.

Hotels&Motelswouldbeaffectedbytherequirementthatthey“provideguestswiththeoptionofhavingtowelsandlinenslaundered,andprominentlydisplaythisoption.”TheStateWaterBoardassumesthisparticularrequirementisextremelyunlikelytocreateoreliminateanyhotelindustryjobs.Therequirementsarenotlaborintensive.Hotelsandmotelsmayhiretemporarystafftoinstallthesigns,butthislabordemandislikelytobeverysmalland,inmanycases,haslikelyalreadyoccurred.TheHotelsandMotelssub‐sectioninSectionIII.MethodsandAssumptions,providesfurtherjustificationforthisconclusion.

Restaurantswouldbeaffectedbytheprohibitionagainst“theservingofdrinkingwaterotherthanuponrequestineatingordrinkingestablishments….”TheStateWaterBoardassumesthisparticularprohibitionisextremelyunlikelytocreateoreliminateanyjobs.Theonlychangeinstandardfoodserviceoperatingprocedureswouldbethatserversdonotbringwatertoacustomerunlessthecustomerrequestsit.TheStateWaterBoardassumesthatthisformalityrepresentsaminorfractionofservers’workloads,andthatprohibitingitwouldnotsignificantlylessentheirresponsibilitiessuchthatanyrelatedjobswouldbeeliminated.

Jobsinthelandscapeindustriesmaybeimpactedbytheproposedregulation,buttheStateWaterBoardlackedthedatatoestimatetheseimpacts.Thefollowingprohibitionsmaycreateoreliminatejobsinthelandscapesector:



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AnychangesinthelandscapeindustrywoulddependgreatlyonhowCaliforniansrespond.AsdescribedintheMediansandOtherwastefuloutdoorwaterusesub‐sectionsinSectionIII.MethodsandAssumptions,Californiansmayrespondinavarietywaystoeachoftheprohibitions(e.g.,bylettingthelawnbrown,byadjustingawastefulirrigationsystem,byhiringaprofessionaltoadjustawastefulirrigationsystem,and/orbyreplacingexistinglandscapes,etc.).

Giventhesemultiplepathwaystocompliance,theStateWaterBoardconsideredimpactstothefollowingbusinesstypes:

Sodfarmers:Ifasubstantialpercentageofthoseagenciesthatmanagepubliclyowned,turf‐onlymediansopttoreplacewater‐intensiveturfwithavarietythatneedsnoirrigation,sodgrowersmaybecompelledtoshiftproductiontoamoredrought‐tolerantturftype.

Xeriscapenurseries:Iftheprohibitionscompelenoughpeopletoreplaceturfwithwaterefficientplants,nurseriesspecializinginthoseplanttypesmayexperienceanincreaseindemand.

Landscapebusinesses:Thoselandscapebusinessesthatprovideirrigationequipmentandservices(includingirrigationinstallation,repair,andmaintenance)mayexperienceanincreaseddemandinordertoimproveexistingirrigationsystems.

Aspreviously,stated,ofimpactoftheproposedregulationonlandscapebusinessesandrelatedindustrieswilldependonhowCaliforniansrespondtotheprohibitions.BecausetheWaterBoard1)lackedsufficientdataaboutwhatpercentageoftasksmaybedonein‐house,and2)lackedbasicindustrydata(suchasthenumberandtypesoflandscapebusinesses),theBoardcouldnotconstructareasonablesetofassumptionstoestimatethenumberofjobsthatwouldbecreatedoreliminated.

However,weacknowledgethattheaforementionedprohibitionsarelikelytobeneficiallyimpactthissector.Ina2015documentpreparedfortheWaterBoard,ExecutiveOrderB‐29‐15StateofEmergencyDuetoSevereDroughtConditions:EconomicImpactAnalysis,theauthorsfindthatexpenditurestousewatermoreefficientlyoutdoorswillbenefitthelandscapingsectorbyhelpingto“catalyzeanew,droughtorientedsub‐sectorofthelandscapingservicessector....”

A.7–TheproposedregulationwillnotlikelyreducetheabilityofCaliforniabusinessestocompete.Thisregulationisasteptowarddroughtresilience.VulnerabilitytofuturedroughtsmayreduceCalifornia'scompetitiveness.ReducingvulnerabilitybyincreasingresiliencewillataminimummaintainandatbestenhanceCalifornia’scompetitiveness.

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EstimatedCosts

B.1–TheStateWaterBoardestimatestheproposedregulation,overitslifetime,willhavestatewideeconomic(notfiscal)directcoststotaling$15,966,396.Lookingatcostsovertheproposedregulation's“lifetime”requiresdefiningthelifetime.TheStateWaterBoardassumeda20‐yearlifetimeandassignedayearlydiscountrateof0.5percent.Tocalculatethepresentvalueofthe20‐yearstream,theWaterBoardsummedtheannualpresentvalues,assumedtodeclineby0.5percentperyear.Table3showsthefirstfiveyearsofthe20‐yearhorizon.TheStateWaterBoardestimatesthatannualcostswillbecomeandremain$0startinginYear3.

Costsovera20‐YearLifetimeforBUSINESSESANDINDIVIDUALS

RealInterestRate,20‐year,i 0.50%Source:OMB,CircularA‐94AppendixC,RevisedNovember2016.

FirstYearofTimeHorizon,January1 2018

LastYearofTimeHorizon,January1 2038 Year,PositionintheTimeHorizon Year1 Year2 Year3 Year4 Year5Year,Calendar,t 2018 2019 2020 2021 2022DiscountFactor=1/(1+i)^(t‐2018) 1.000 0.995 0.990 0.985 0.980

EconomicDirectCostofPrivateSuppliersandCustomers

Year,PositionintheTimeHorizon Year1 Year2 Year3 Year4 Year5Costs,Economic(notFiscal)2015$ 2,313,022 13,721,641 0 0 0PresentValue,eachyear 2,313,022 13,652,374 0 0 0SumofPresentValues(forDirectEconomicCosts) 15,966,396 For399 Table3:Lifetimecostsoftheregulation

Thecostschangeinthefirsttwoyears;thereafter,theStateWaterBoardassumestheyremainconstant,inrealterms.ThepinkhighlightedcellsinTable3showthedirecteconomiccostsforYear1,Year2andYear3.ThefollowingparagraphsexplainhowtheBoardestimatedthosecosts.

Inthefirstyear(Year1),theBoardassumesthefollowing:

Californiansconservewaterduetotheproposedregulation(seeEstimatingAnnualWaterSavings)andthesewatersavingscausewatersupplierstoloserevenue(SeeRevenueLosses).Grossrevenuelosstoprivate2suppliers=totalsupplierrevenuelosses*15%.) Thesuppliersabsorbthislossinthefirstyear;inotherwords,theydonotpasson

lostrevenuecoststocustomersinthefirstyear. Customersandprivatesupplierspurchasenozzles(SeeNozzles). Urbansupplierspassonnozzlecoststocustomersasaone‐timesurcharge(SeeOne‐

timeSurcharges).

Year1:DirectEconomicCosts(2015$) GrossRevenueLosstoPrivateSuppliers 2,046,504

2AsstatedinPercentage public and private urban water suppliers,theWaterBoardassumes15%oftheurbanwatersuppliersareprivatesuppliers.WeonlyconsidercoststoprivatesuppliersinestimatingEconomicimpacts.WeconsiderimpactstopublicsuppliersintheFiscalsectionofthe399.

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NozzleCosttoPrivateSuppliers $12,622NozzleCosttoHouseholdsinWaterCharges $84,632NozzleCosttoHouseholds'DirectPurchases $169,264TotalDIRECTEconomicCost,FirstYear $2,313,022Table4:Firstyear,directeconomiccosts

Inthesecondyear(Year2),theBoardassumesthefollowing:

Asaone‐timesurchargetocustomers,theurbansupplierspassontherevenuelosscoststheyincurredinYear1(SeeOne‐timeSurcharges).

ByYear2,urbansupplierswillhavepermanentlyadjustedfixedservicechargessothattheydonotloserevenueascustomerscontinuetoconserve.Usinglesswater,customerswouldnotpaymore(SeeAdjustedservicecharges).

Year2:DirectEconomicCosts(2015$)

CustomersRepayGrossRevLosstoAllSuppliers $13,721,641TotalDIRECTCost,SecondYear $13,721,641Table5:Secondyear,directeconomiccosts

AfterYear2,foralltheyearsremaininginthetimehorizon,withallotherconditionsremainingthesame,thecostsandbenefitsduetotheregulationremainconstantintermsof2015dollars.TheStateWaterBoardassumesthesecoststobe$0.Althoughotherfactorssuchaspopulationincreasesmayproducehigherwatercosts,thesecostincreaseswouldnotbeduetotheproposedregulation.B.1.aAccordingtoDGS,asmallbusinessemploysnomorethan100peopleandhasaverageannualgrossreceiptsof$15millionorless.TheStateWaterBoardcannotdeterminewhethertherewillbeanycoststosmallbusinesses.

TheStateWaterBoardassumesmostCalifornialandscapebusinessesaresmallbusinesses.TheWaterBoardassumesthatanylandscapingworkresultingfromtheregulationwouldbesimilarinkindtoworkthesebusinessesalreadyperform.Assuch,smalllandscapingbusinesseswouldnothavetoincurcoststopurchasenewequipmentoracquirenewskills.TheWaterBoardassumesnodirectcoststosmalllandscapingbusinesses.

Theregulationmayalsoimpactsmallhotelandmotelbusinesses.However,theBoardcouldnotestimatetheinitialorongoingcosts.TheBoardwouldneedtoestimatethenumberofroomsthatdonotalreadyhavesignswiththerequiredmessaging.Consideringthattheemergencyregulations’requirementsforsuchsignagehavebeeninplacesinceJuly2014,itisunlikelythatasignificantnumberofexistinghotelsandmotelsdonotalreadydisplaythistypeofsignage.TheBoardcannotdeterminethenumberofroomscurrentlylackingappropriatesignage,ifany.IntheWaterBoard’srandomsampleofUWMPs,65%ofthesuppliersalreadyhavethesameorasubstantiallysimilarrequirementthathotelsandmotels“provideguestswiththeoptionofhavingtowelsandlinenslaundered….”Thissuggestsmanyhotelsandmotelswoulddisplaysuchsignageeven

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withouttheBoard’srequirement(SeeHotelsandMotels).Thus,theinitialandongoingcoststosmallhotels&motelswouldbeinsignificant.

B.1.bAtypicalbusinessthatwouldbeimpactedbytheproposedregulation,andtheimpactstoitreasonablyestimated,isaprivatewatersupplier.TheStateWaterBoardconsideredthecostsoftheproposedregulationonprivatewatersuppliers.Theproposedregulationwouldimpactprivatewatersuppliersdifferentlyinthefirstandsecondyears;afterthesecondyear,annualcostsareexpectedtobe$0.Table6showstheannualcoststoprivatewatersupplier.

DirectEconomicCosts(2015$) Year1 Year2 Years3‐20

GrossRevLosstoPrivateSuppliers $2,046,504 0 0

NozzleCosttoPrivateSuppliers 12,622 0 0

TotalDirectCostsfor61PrivateSuppliers $2,059,126 $0 $0

NumberofPrivateSuppliers 61

CostsforaTypicalBusiness $33,756 $0 $0Table6:Typicalbusinesscosts

Aprivatewatersupplierwouldinitiallybeexpectedtoincurcostsinthefirstyearofupto$33,756.However,thisestimatelikelyoverestimatesthetruecosttoprivatesuppliers,giventheygenerallyhavepre‐approvedrevenueadjustmentmechanisms,whichenablethemtorecoverfixedcostswhensalesdeclinefromconservationefforts(Mitchelletal.2017).TheBoardexpectsthefirstyeartobethemostexpensiveyearbecausethesuppliersmayloserevenueastheircustomersconservewater.Theyalsomaypurchasenozzlestodistributetocustomers.Afterthefirstyear,supplierswouldadjustchargestoadequatelycoverfixedcosts.

B.1.cTheStateWaterBoardassumessupplierspassontheircosts(i.e.,revenueloss,andnozzlepurchases)tocustomers,includinghouseholdsandCommercial,Industrial,andInstitutional(CII)entities.Forthepurposesofthissectionofthe399,theBoardconsidersthe“initialcoststotheindividual”tobetheinitialcoststotheindividualhousehold.Theinitialcostsforhouseholdswouldlargelyoccurinthesecondyear,theyearcustomersrepaythesupplier’slostrevenuefromthefirstyear.Thehighestone‐timecosttoahouseholdis$1.12forYear2.Thisisslightlymorethanonedollar.TheBoardestimatesongoingcoststobe$0.03peryear.SeeTable7.

DirectEconomic(notfiscal)Costs Year1 Year2 Year3

GrossRevLossRepaidbyAllCustomers,$ $0 $13,721,641 $0

NozzleCosttoAllCustomers $253,896 $0 $0

TotalDirectCoststoCustomers,$/yr $253,896 $13,721,641 $0

TotalPopulationServedbyUrbanSuppliers 36,489,411

AverageNumberofPersons/Household 2.97

EstimatedNumberofHouseholdsServed 12,285,997

EstimatedCostperIndividualHousehold,$/yr $0.02 $1.12 $0Table7:Initialcostsforanindividual

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B.1.dOthereconomiccostsmayoccurdependingonhowpeoplerespondtotheprohibitions.Forexample,householdsmayrespondtotheprohibitionagainstirrigationthatcausesrunoffbyreplacingexistingoutdoorlandscapes.Ifthatweretohappen,householdcostswouldincrease,landscaperswhomaintainlawnscouldlosebusiness,andlandscaperswhospecializeinreplacementlandscapingcouldgainbusiness.However,householdsmayalsorespondtothatparticularprohibitionbysimplyirrigatingless;inthisscenario,economiccostswouldbemuchlower,possiblyevenanetsavings.

B.2Theproposedregulationmayimpactseveralindustries.Lackingtherequisitedata,theStateWaterBoardcouldnotreasonablyestimateimpactsontheseindustries.Ingeneral,thedescriptionsinA.4(numberofbusinessescreatedoreliminated)andA.6(numberofjobscreatedoreliminated)applytothissection.

B.3Therearenoreportingrequirementsinthisproposedregulation.

B.4TheStateWaterBoarddoesnotexpectthisregulationtoimpacthousingcosts.AsdiscussedinB.1.c(coststoindividuals),theBoardestimatestheproposedregulationwillresultinongoingcostsof$0.00/year.TheBoarddoesnotexpecttheseminorcoststoimpacthousingcosts.

B.5TheproposedregulationdoesnotduplicateorconflictwithFederalregulations.TherearenoregulationsinthefederalCodeofRegulationsthataddresswasteandunreasonableuseorimposepenaltiestoHOAsandcities.Therefore,theStateWaterBoardassumesnoadditionalcostsduetodifferencesbetweentheStateandFederalregulations.

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EstimatedBenefits

C.1ThemostsignificanteconomicbenefitoftheproposedregulationisitscontributiontoCalifornia’sfuturewatersecurity.Robustlyestimatingthestatewidevalueofthiscontributionwouldbewhollyspeculativebasedonexistingdataandstudies.Thisproposedregulationdefinesspecificwaterusesaswasteandunreasonable,increasingconservation,which,inturn,increasesdroughtresilience;italsoimposespenaltiesonHOAsandcitieswhentheydonotcomplywithexistinglaw.

Ingeneral,theStateWaterBoardperceivesseveralcategoriesofpotentialbenefits,includingincreasedstreamsflows,decreasedenergyuse,increasedactivitiesindrought‐basedindustries,increasedwaterquality,increasedawarenessaboutwaterwaste,reducedprobabilityofsevereeconomicdisruptions,andmoreequitablemanagementofwater.Inaddition,theBoardexpectspotentialbenefitstosmallbusinessessuchasrestaurants(savingwaterandenergybywashingfewerglasses),landscapers(increaseddemandforirrigationdesign,installation,andmanagement),andsmallandlargehotels&motels(savingwaterandenergybywashinglesslinen).Thesebenefitsareunlikelytosignificantlyimpactthestate’seconomy.

Tocompletetheeconomicimpactanalysis,theStateWaterBoardconsideredtwocategoriesofprobablebenefits,wheretheBoardcouldbaseitsestimatesonavailabledata.Thosecategoriesare(1)VariableCostSavings;and(2)OffsetDemandSavings.TheBoardbasedtheseestimatesonthewatersavingsduetotheprohibitions,12,489AF/yr(SeeEstimatingAnnualWaterSavings).

C.2TheproposedregulationwouldcarryoutdirectivesintwoExecutiveOrders:B‐37‐16inMay2016andB‐40‐17inApril2017;italsoimplementstheStateWaterBoard’sgeneralauthoritytopreventthewasteandunreasonableuseofwater.Inaccordancewiththoseexecutiveorders,theStateWaterBoardhasbeentaskedwitheliminatingwaterwastebypermanentlyprohibitingsomepracticesthatwastewater,suchas:hosingoffsidewalks,drivewaysandotherhardscapes;washingvehicleswithhosesnotequippedwithashut‐offnozzle;usingnon‐recirculatedwaterinafountainorotherdecorativewaterfeatures;wateringlawnsinamannerthatcausesrunoff,orwithin48hoursaftermeasureableprecipitation;andirrigatingornamentalturfonpublicstreetmedians.

C.3TheStateWaterBoardestimatestheproposedregulation,overitslifetime,willhavestatewideeconomic(notfiscal)benefitstotaling$167,748,630.Lookingatbenefitsovertheproposedregulation's“lifetime”requiresdefiningthelifetime.TheStateWaterBoardassumeda20‐yearlifetimeandassignedayearlydiscountrateof0.5percent.Tocalculatethepresentvalueofthe20‐yearstream,theWaterBoardsummedtheannualpresentvalues,assumedtodeclineby0.5percentperyear(e.g.,$8,790,771inthefirstyear;8,747,036inthesecondyear,etc.).Table8showsthefirstfiveyearsoftheannualpresentvalues,and,inthelastandhighlightedrow,theirsum:$167,748,630.Forcomparison,Table8alsoshowsthefirstfiveyearsoftotaldirectbenefitsforthe20‐yearhorizon.TheBoard

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estimatesthatannualbenefitsof$8,790,771willbeconstantinfuture2015dollarsstartinginYear1.

Toestimatethebenefits,theStateWaterBoardassumedthefollowing:

Privatesuppliersrealizevariablecostsavings(SeeVariableCostSavings).PrivateSupplier3variablecostsavings=totalsuppliervariablecostsavings*15%.

Privatesuppliersrealizeoffsetdemandsavings(SeeOffsetDemandSavings).PrivateSupplieroffsetdemandsavings=totalsupplieroffsetdemandsavings*15%.

Allurbansupplierspassonvariablecostandoffsetdemandsavingstocustomers.

DirectBenefitsovera20YearLifetimeforBUSINESSESANDINDIVIDUALSRealInterestRate,20‐year 0.50%

FirstYearofTimeHorizon,January1 2018

LastYearofTimeHorizon,December31 2038

Year,PositionintheTimeHorizon Year1 Year2 Year3 Year4 Year5

Year,Calendar,t 2018 2019 2020 2021 2022

DiscountFactor=1/(1+i)^(t‐2018) 1.000 0.995 0.990 0.985 0.980

EconomicDirectBenefittoPrivateSuppliersandCustomers

Year,PositionintheTimeHorizon Year1 Year2 Year3 Year4 Year5

VariableCostSavingstoPrivateSuppliers $431,755 $431,755 $431,755 $431,755 $431,755

OffsetDemandtoPrivateSuppliers $709,175 $709,175 $709,175 $709,175 $709,175

VariableCostSavingstoallCustomers(benefitsfromPrivate+PublicSuppliers)

$2,894,884 $2,894,884 $2,894,884 $2,894,884 $2,894,884

OffsetDemandSavingstoallCustomers(benefitsfromPrivate+PublicSuppliers) $4,754,957 $4,754,957 $4,754,957 $4,754,957 $4,754,957

TotalDirectBenefits,Economic(future$) $8,790,771 $8,790,771 $8,790,771 $8,790,771 $8,790,771

PresentValue,eachyear $8,790,771 $8,747,036 $8,703,519 $8,660,217 $8,617,132

SumofPresentValuesforDirectEconomicBenefits:$167,748,630Table8:Lifetimedirect,economicbenefitoftheproposedregulation.

C.4Landscapingbusinessesmayexpandasaresultoftheproposedregulation.Thesebusinessescanhelpwatercustomers(1)installandmanagemoreefficientirrigationsystemstopreventrunoff,(2)installandmaintainirrigationsystemsthatrespondtoweatherconditions,(3)managetheretrofittingorrebuildingofinlinefountains,and(4)providetechnicalandhorticulturalassistancefordrought‐tolerantorxeriscapeplantings.

3 AsstatedinPercentage public and private urban water suppliers,theWaterBoardassumes15%oftheurbanwatersuppliersareprivatesuppliers.WeonlyconsiderbenefitstoprivatesuppliersinestimatingEconomicbenefits.WeconsiderimpactstopublicsuppliersintheFiscalsectionofthe399.

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AlternativestotheRegulation

D.ALTERNATIVESTOTHEREGULATION

D.1

Asanalternativetotheproposedregulation,theStateWaterBoardconsideredprohibitingwastefulwaterusepracticesthroughNationalPollutantDischargeEliminationSystem(NPDES)MunicipalSeparateStormSewerSystems(MS4s)permits.Thealternativewasrejected.

TointegrateaspectsoftheproposedregulationintoNPDESMS4permits,theStateWaterBoard’sClimateandConservationunitcouldworkwiththeagency’sstormwaterprogramstoensurefuturePhase‐1andPhase‐2permitsprohibitwastefulwaterusepractices.Thereare,however,severallimitationstothisalternative.

First,MS4permitsonlyaddressillicitdischarges.Accordingly,thoseprohibitionsthatwouldnotreducerunoff(e.g.,thoseaffectingindooruse)wouldbeomitted.Secondly,dischargesonlyneedtobeaddressediftheyhavebeenidentifiedbyapermitteeassourcesofpollutants.NotallRWQCBshaveidentifiedthewastefuloutdoorwaterusepracticestobeprohibitedbytheproposedregulationassourcesofpollutants.Theprohibitionswouldthereforevaryacrossthestate.Thirdly,theprohibitionagainstwateringwhilerainingwouldbedifficulttoenforceasaNPDESpermitcondition,inadditiontobeingpossiblyinconsistentwiththepurposeofMS4permits,i.e.,duringwetweatherrunoff,thevolumeofirrigationwaterflowingofflandscapeswouldarguablyhaveademinimuscontributiontototalpollutantloading.

Insum,asanalternativetotheproposedregulation,relyingonNPDESMS4permitswouldconsiderablylimitthescopeandextentoftheprohibitions.

Formoredetailaboutthisalternative,seetheInitialStatementofReasons.

D.2TheStateWaterBoarddidnotestimatethebenefitsorcostsofthealternativebecausetherearesignificantquantificationissues.

D.3Thequantificationissuesaresubstantial.

UsingtheMS4permitswouldrequireestimatingregion‐specificcoststhataddressspecificlocalcircumstances.Estimatingastatewidecostforactivitiesthatwouldresultinallpermitscomplyingwiththesamestatewideconservationgoal(suchasnorunoff)wouldrequireestimatingthegapbetweentheexistingpermitandthestatewidegoalandthenestimatingthecostofclosingthatgap.Furthermore,theStateWaterBoardcouldonlyestimatethecostofimplementingviapermitthoseprohibitionsthatwouldalsoreduceillicitdischarges.Thus,itwouldnotbepossibletoestimatethecostofimplementingallprohibitionsincludedintheproposedregulationbecauseonlysomeprohibitionsmaybeenforceableundertheNPDESMS4permit.

D.4PursuanttoGovernmentCodesection11346.2,subdivision(b)(4)(A),inthecaseofaregulationthatwouldmandatetheuseofspecifictechnologiesorequipmentorprescribe

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specificactionsorprocedures,theimpositionofperformancestandardsshallbeconsideredasanalternative.Asasecondalternative,theStateWaterBoardconsideredasaperformancestandardwaterusereductiontargets.However,theBoardrejectedthisasanalternativetotheproposedregulationasitwouldrequireamendingtheWaterCode.TheStateWaterBoarddoesnotpresentlyhaveauthoritytoestablishandimplementsuchstandards.

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MajorRegulationsE.1TheestimatedcostsofthisregulationtoCaliforniabusinessenterprisesdoNOTexceed$10million.

Theestimateddirectcoststobusinessenterprisesaretheestimateddirectcoststothe61PrivateSuppliers.ThehighestdirectcostsoccurinYear1andareestimatedtobe$2,059,126.

DirectEconomic(notfiscal)Costs Year1GrossRevLosstothe61PrivateSuppliers $2,046,504NozzleCosttothe61PrivateSuppliers $12,622TotalDirectCostsfor61PrivateSuppliers $2,059,126

BecauseE.i=NO,skiptoE.4.

E.4Thehighestestimatedannualeconomicimpacttobusinessenterprisesandindividualsis$27,443,282,whichoccursinYear2afterimplementation.

Year1 Year2 Year3TotalDirectCosttoBusinessEnterprises(the61PrivateSuppliers)

$2,059,126 0 0

TotalDirectCosttoIndividuals(theCustomersofallSuppliers) 253,896 13,721,641 0

TotalDirectCosttoBusinessEnterprisesandIndividuals 2,313,022 13,721,641 0AssumeMultiplierValue 2 2 2TotalCostImpacttoBusinessEnterprisesandIndividuals 4,626,044 27,443,282 0

HighestCostImpactoccursinYear2 27,443,282

E.5aThisproposedregulationisastepinthedirectionofincreasedwatersecurityinthefuture.IncreasedsecuritymayencourageinvestmentinCaliforniawhencomparedwithlesscertainfuturewatersupplies.

E.5bThisproposedregulationincreasespublicattentiontothevalueofwatersavingsandmayencourageinnovationinproductssuchasmoreefficientirrigationsystems,materialssuchasdroughttolerantplantsandwatersavingmulches,andprocessessuchasirrigationprocessesthatarecustomizedtospecificplants,soils,andtopography.

E.5cTheBenefitSectionoftheInitialStatementofReasonsprovidesalistofbenefitsthatextendbeyondthosethatcanbemonetized.Inaddition,theproposedregulationwilllikelycontributetoagreaterpublicconsciousnessaboutthevalueofwater.

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FiscalImpactStatement

FiscalEffectonLocalGovernmentF‐A.FiscalEffectonLocalGovernmentForthepurposesofthisanalysis,theStateWaterBoardconsidersthepublic4urbanwatersuppliers"localgovernment."TheBoardconsiderstheimpactoftheproposedregulationonpublicwatersuppliersafiscalimpact.

F‐A.1NoneofthecostsduetotheproposedregulationarereimbursablebytheState.

F‐A.2AdditionalexpendituresnotreimbursablebytheStateincludepublicwatersuppliernetrevenuelossesandnozzlepurchases.

TheWaterBoardassumesthefollowing:

Californiansconservewaterduetotheproposedregulation(seeEstimatingAnnualWaterSavings)andthesewatersavingscauseurbansupplierstoloserevenue(SeeRevenueLosses).Netrevenuelosstopublicsuppliers=totalsupplierrevenuelosses*85%.) Thesuppliersabsorbthislossinthefirstyear;inotherwords,theydonotpasson

lostrevenuecoststocustomersinthefirstyear. Publicsupplierspurchasenozzles(SeeNozzles/Table18:EstimatedNozzleCosts).

Table9detailsthosedirect,fiscalcosts.

FiscalCost=RevenueLosstoPublicSuppliers+NozzleCoststoPublicSuppliersGrossRevenueLossPublicSuppliers $11,675,137NozzleCosttoPublicSuppliers $72,010

TotalDIRECTFiscalCost,FirstYear $11,747,147Table9:Direct,Fiscalcosts

F‐A.2.eThesecostsarenotreimbursablebytheStatebecausetheyarefullyfinancedfromthefeesthesupplierschargetheircustomers.

TheRighttoVoteonTaxesAct,enactedin1996Prop.218,amendedtheCaliforniaconstitutionbyaddingarticlesXIIICandD.Therevenueapublicagencyderivesfromafeecannotexceedthefundsrequiredtoprovidetheservice.

F‐A.3Theproposedregulationwillresultin$6,508,912/yearindirectfiscalbenefits.Thosebenefitsareequaltothesumofthepublicurbanwatersuppliervariablecostsavingsandtheoffsetdemandsavings.SeeTable10.

Toestimatethebenefits,theStateWaterBoardassumedthefollowing:

Privatesuppliersrealizevariablecostsavings(SeeVariableCostSavings).PublicSuppliervariablecostsavings=totalsuppliervariablecostsavings*85%.

4AsstatedinPercentage public and private urban water suppliers,theWaterBoardassumes85%oftheurbanwatersuppliersarepublicsuppliers.WeonlyconsidercoststopublicsuppliersinestimatingFiscalimpacts.WeconsiderimpactstopublicsuppliersintheEconomicsectionofthe399..

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Privatesuppliersrealizeoffsetdemandsavings(SeeOffsetDemandSavings).PublicSupplieroffsetdemandsavings=totalsupplieroffsetdemandsavings*85%.

Table10detailsthosedirect,fiscalbenefits.

FiscalBenefit=VariableCostSavings+OffsetDemandSavingsVariableCostSavingstoPublicSuppliers $2,463,129 SeeTable20OffsetDemandSavingstoPublicSuppliers $4,045,783 SeeTable22TotalFiscalBenefits,$/yr $6,508,912

Table10:Direct,FiscalBenefits

FiscalEffectonStateGovernment

F‐B.1TherearenoadditionalexpendituresinthecurrentStateFiscalYear.ItisanticipatedthatanyadditionalcostswillbeabsorbedwithintheStateWaterBoard'sexistingrequestthathasbeenfulfilledtohireprogrammaticandenforcementstaffthatwillperformanyadditionaltaskswithintheirjobdescriptions.

F‐B.2NosavingsarelikelyinthecurrentStateFiscalYear.

F‐B.3ThisproposedregulationdoesnotaffectanyStateagencyorprogramafterimplementation.

F‐CNofederalfundingwillbeimpactedbytheproposedregulation.

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SectionIII.MethodsandAssumptions

ThefollowingpagesexplainandindextheStateWaterBoard’smethodsandassumptions.TheStateWaterBoardcompletedthecalculationsinExcel,usingrealnumbers,i.e.numberswithdecimalvalues.Withinthisdocument,theBoarddisplaystheresultsofthesecalculationsaswholenumbers,orintegers.Usingthedisplayednumbersincalculationsmayproducedifferentresultsduetorounding.

“Annual”watersavingsTheStateWaterBoardassumestheestimatedannualsavingsarethesameyearafteryear.Whilesavingsarelikelytovaryannually—notonlybecausepeople’shabitschangedependingonnumerousfactors(suchaswhetherornotthestateisindrought),butalsobecausetheState’spopulationisincreasing—thereisnowaytospecificallycalculatetheseunknownvariations.TheBoardusedthebestavailableexistingdatatoestimatetheannualsavingsduringanaverageyear.TheStateWaterBoardusedtheestimatedwatersavingstocompletethe399analysis.Forthepurposesofthisanalysis,thisdocumentandtheForm399refertothesavingsas“annual”savings.

EstimatingAnnualWaterSavingsAtthefoundationoftheeconomicimpactanalysisistheestimatedwatersavingsduetotheproposedregulation.Table11showstheestimatedstatewidewatersavingsduetotheproposedregulationare12,489acre‐feet(AF)peryear.Toestimatethewatersavings,weusedtheBoard’sUrbanWaterSupplierProductionandConservationReportingdatabase(Reportingdatabase).TheStateWaterBoardfirstadopteddroughtemergencyconservationregulationsinJune2014.Amongotheractions,theemergencyregulationsrequiredurbanwatersupplierstosubmitmonthlyproductionreportstotheBoard,includinginformationaboutcurrentand2013(baseline)productionvolumes.ComparingcurrentproductiondatatothebaselineenablestheBoardtotrackwatersavingsovertime.

HydrologicRegion[DWRa,2013]

AFSavedfromJune2014toApril2017

AFSavedduetoprohibitions

[columnA*1%]

AnnualAFSavingsduetoprohibitions

[columnB/2.8years]

A B CCentralCoast 131,150 1,312 463

ColoradoRiver 115,850 1,158 409

NorthCoast 27,905 279 98

NorthLahontan 8,504 85 30

SacramentoRiver 509,086 5,091 1,795

SanFranciscoBay 582,310 5,823 2,054

SanJoaquinRiver 238,309 2,383 840

SouthCoast 1,538,675 15,387 5,426

SouthLahontan 84,976 850 300

TulareLake 304,592 3,046 1,074

Total 3,541,357 35,414 12,489Table11:StatewideWaterConservationbyhydrologicregion(June2014‐April2017)

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TheStateWaterBoardhascalculatedcumulativewatersavingsandmonthlywatersavingseverymonthsincethistypeofwaterusereportingbecamerequired.TheBoard’smonthlycalculationindicateshowmuchwatersuppliershaveconservedsincetheemergencyregulationswerefirstadoptedinJune2014.ColumnAofTable11showshowmuchwaterCalifornianssavedineachhydrologicregionbetweenJune2014andApril2017(a2.8‐yearperiod).Forreasonsdescribedinsubsequentparagraphs,theStateWaterBoardattributes1%ofthosesavingstoprohibitionsagainstwastefulwateruses.5ColumnBshowsthecumulativesavingsduetotheprohibitions(A*1%);columnC,theannuallyaveragedsavingsoverthe2.8‐yearperiod.Thetotalreportedsavingsfrom2014‐2017(i.e.,the3.5millionAF)reflectnotonlytheprohibitions(requiredbytheemergencyconservationregulations)butalsothe2014droughtproclamation(OfficeoftheGovernor2014)andthe2015mandate(OfficeoftheGovernor2015).The2014proclamationcalledonCalifornianstovoluntarilyconservewater,withagoalofreducingstatewideurbanwateruseby20percent.BetweenApril2014andApril2015,statewideconservationeffortsreached9percent,basedonwaterusedatareportedtotheBoard.Withdroughtconditionsworseningin2015,onApril2,2015,theGovernorBrownissuedExecutiveOrderB‐29‐15,mandating,amongotherthings,thatCaliforniansreducestatewidepotableurbanwateruseby25percent.WhentheGovernor’smandatewentintoeffect,Californiansrespondedimmediately,reducingwateruseby23.9percentbetweenJune2015andJune2016.TheStateWaterBoardassumesthevoluntarygoalandthemandatoryreductionsresultedinmostofthetotalwatersavings,andthattheprohibitionsaloneresultedinamuchsmallerportion.Thetotalreportedsavingsadditionallyreflecttheimpactofpre‐existingpolicies.CaliforniabecamethefirststatetoadoptawateruseefficiencytargetwiththepassageofSBX7‐7in2009.SBX7‐7mandatedthestateachievea20percentreductioninurbanpercapitauseby2020.Thereductiongoalisalsoknownas“20x2020.”SBX7‐7directedwatersupplierstodevelopindividualtargetsforwaterusebasedonahistoricpercapitabaseline.ThesavingsobservedbetweenJune2014andApril2017additionallyreflectthepastandon‐goingworkofwateragenciestoreduceurbanwateruse20percentagainstthatbaselineby2020.TheStateWaterBoardalsoconsideredtheroleofUrbanWaterManagementPlans(UWMPs,orPlans)inspurringwatersavings.TheUrbanWaterManagementPlanningActrequiresurbanwatersupplierstoprepareandadoptaPlan,andtoupdateitatleastonceeveryfiveyears.ThePlansprovideaframeworkforlongtermwaterplanningandmustcontaininformationabout:waterdeliveriesanduses;watersupplysources;demandmanagementmeasures;andwatershortagecontingencyplanning.Thecontingency

5 Alongwiththereportingrequirements,theJune2014emergencyconservationregulationsalsoprohibitedcertainwastefulandunreasonableusesofwater(thesameusesthatwouldbeprohibitedbytheproposedregulation).

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analysismustincludeinformationabout“mandatoryprohibitionsagainstspecificwaterusepractices….”(DWR2016).WithintheUWMPs,mandatoryprohibitionsarecontainedwithinwatershortagecontingencyplan(WSCP)stages,andvarybyagencyandthedeclaredwatershortagestage.Typically,supplierswillincludebetweenthreeandfivestagesinawatershortagecontingencyanalysis,witheachsubsequentstagereflectingdecreasingwatersupplies(DWR2016).Stagesaredefinedattheurbansupplier’sdiscretion:theycanbedefinedquantitatively(e.g.,Stage1representsa10%supplyreduction)orqualitatively(e.g.,astage1representsa"mildwatershortage”).Thehigherthestage,themorestringenttheprohibitionswillbe.SeeTable12forahypotheticalexample.

Stage ExampleProhibitions0 Normal Applicationofpotablewatertooutdoorlandscapesthatcausesrunoff.1 Moderate Hosingofhardscapesurfaces,exceptforhealthandsafetyneeds.2 Significant Outdoorwateringmorethan3daysperweek.3 Severe Outdoorwateringmorethan2daysperweek.4 Critical Outdoorirrigation.Table12:Hypotheticalexampleofthevariousstagesofwatershortagecontingencyplans

DuringtherecentCaliforniadrought,urbanwatersuppliersinvokedWSCPsrequiringsignificantconservationmeasures(asindicatedintheReportingdatabase).Formanyutilities,later‐stageprohibitionsareconsiderablymorerestrictivethanthoserequiredbytheproposedregulation,suggestingthatanysavingsduetotheprohibitionsrequiredviatheemergencyconservationregulationswouldbesmallrelativetothoseexpectedtobeachievedvialater‐stageWSCPs.Finally,theStateWaterBoardbaseditsassumptionthat1percentofthetotalreportedsavingscanbeattributedtotheprohibitionsonanexaminationofchangestooutdoorwinterwateruse.TheBoardexaminedoutdoorwinterwaterusebecause,accordingtotheresultsofananalysistheBoardcompleted(seeSampleofUWMPssub‐sectioninthe399supplement),only16ofthe40randomlysampledUWMPsincludedtheprohibitionrestrictingirrigationduringandwithin48hoursaftermeasurablerainfall(thefifthprohibitioninTable13).Lookingattherelativelyuncommonno‐irrigating‐when‐it’s‐rainingprohibitionprovidedanopportunitytodistinguishtheinfluenceofthestate‐mandatedprohibitionsfromthoseattributabletolocally‐drivendroughtresponsesandpolicychoices.Toanalyzetheimpactofthefifthprohibition,theWaterBoardcomparedpre‐droughtwinterwateruse(2013)towinterwateruseduringthedrought(2014,2015,and2016).TheBoardfirstestimatedwhatpercentageofthereportedwintersavingsoccurredoutdoors.TheWaterBoardbasedtheestimateofwhatpercentageofthewatersavingsoccurredoutdoorsinpartona2003PacificInstitutedocument,WasteNot,WantNot:ThePotentialforUrbanWaterConservationinCalifornia[Gleicketal,,2003].Table4in

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AppendixB(OutdoorResidentialWaterUseandthePotentialforConservation)listsestimatedaverageCaliforniaoutdoorwateruseeachmonthoftheyear.

Theapplicationofwatertooutdoor

landscapesinamannerthatcausesrunoff

suchthatwaterflow

sontoadjacent

property,….

Theuseofahosethatdispenseswaterto

washamotorvehicle,exceptw

herethehose

isfittedwithashut‐offnozzle.

Theapplicationofpotablewaterto

hardscapes.

Theuseofpotablewaterinanornamental

fountain……unlesswitharecirculating

system

Theapplicationofwatertoirrigateturfand

ornamentallandscapesduringandwithin48

hoursaftermeasurablerainfall…

Theservingofdrinkingwaterotherthan

uponrequestineatingordrinking

establishm

ents

Theirrigationofturfonpublicstreet

medians…

Hotelsandmotelsmustprovideguestswiththe

optionofhavingtowelsandlinenslaundered,

andprom

inentlydisplaythisoption.

Prohibition# 1 2 3 4 5 6 7* 8

%ofsuppliersw/equivalentprohibitions

95% 98% 98% 88% 40% 80% 18% 65%

Table13:PercentageofsampledsupplierswithPlansincludingequivalentprohibitions.*Evenfewersuppliersincludedprohibition7(irrigationofturfonpublicmedians…)inPlans.Analyzingitsimpactwouldalsoprovideanopportunitytodistinguishtheinfluenceofthestate‐mandatedprohibitionsfromthoseattributabletolocally‐drivendroughtresponsesandpolicychoices.However,theWaterBoarddeterminedestimatingitsimpactwouldbeimpossiblegivendataconstraints.SeeMedianssub‐section.

AccordingtothePacificInstituteestimates,anaverageof4percentofCaliforniawinterresidentialwateruseoccursoutdoors.TheWaterBoardassumedproportionatewinterwatersavings,i.e.that4percentofthewaterconservedduringthewintermonthsisduetooutdoorwaterconservationmeasures.Wethencomparedthegallonssavedoutdoors(ColumnDinTable14)tothe2013pre‐droughtwinterbaseline(ColumnA),whichindicatedthatwinterwatersavingsrepresented,respectively,0.36percent,0.72percent,and0.88percentofthe2013winterbaselinesinthe2014/15,2015/16and2016/17wateryears(ColumnE).

Winter1year

2013winterbaseline2(AF)

Winterproduction(AF)

AFsavedAFsavedoutdoors

%of2013baseline

A B C(A‐B) D(C*4%) E({D/A}*100)14/15 1.6million 1.46million 144thousand 5.8thousand 0.36%15/16 1.58million 1.29million 288thousand 11.5thousand 0.72%16/17 1.57million 1.23million 347thousand 13.8thousand 0.88%

1WinterisDecemberthroughMarch.2SincereportingbeganinJune2014,urbanwatersuppliershaverefinedtheir2013baselineestimates.Hence,the2013baselinevaries.Table14:WinterWaterSavingsduetotheno‐irrigating‐when‐it’s‐rainingprohibition

Todistinguishtheinfluenceofthestate‐mandatedprohibitions,theStateWaterBoardassumed1)thatprohibitions1‐4,6and8willresultindeminimisnewsavings,sincemosturbanwatersuppliersalreadyhaveequivalentprohibitionsinplace(SeeTable14);2)thepercentofthetotalestimatedsavingsduetotheno‐irrigating‐when‐itsrainingprohibition

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isequaltothepercentofoutdoorwintersavingsrelativetothe2013winterbaseline;and3)that,becauseno‐irrigating‐when‐itsrainingisarelativelyrareprohibition,itsimpactisareasonableproxyforestimatingthepercentestimatedsavingsduetotheprohibitionsenmasse.Toaccountforadditionalsavingspotentiallyattributabletotheotherprohibitions,theStateWaterBoardconservativelyroundedthe0.65%average(i.e.,(0.36%+0.72%+0.88%)/3)uptoaneven1%.

Tosummarize,theWaterBoardassumesthatcomparingthe2013winterwaterusebaselinetooutdoorwinterwatersavingsduringthedroughtisthebestapproximationoftheeffectsoftheprohibitionsenmasseforthefollowingreasons:

Theno‐irrigating‐when‐it’srainingprohibitionwillsavethemostwaterduringthemonthsofDecember‐March,andisarelativelyuncommonlocalprohibition(Table14)

Californiansembracedotherwintertimeoutdoorconservationmeasures,especiallyduringthehistoricdrought.Measuresincludednotirrigatingatallduringthewintermonths.Inasmuch,attributingwinter‐timesavingstotheno‐irrigating‐when‐it’srainingprohibitionislikelyaconservativeover‐estimateoftheprohibition’simpact.Likewise,ourestimateofthetotalvolumesavedoverestimatestheimpactoftheprohibitionsingeneral.

Theimpactoftheprohibitionsisrelativelysmallgiventheinfluenceofpreexistingpolicies,suchasUWMPs,SBX7‐7,the2014proclamationcallingonCalifornianstovoluntarilyreducewateruseby20percent,andthe2015mandate.

TheStateWaterBoard,basedonthebestavailabledataandstudies,conservativelyestimatedthat1percentofthecumulativestatewidewatersavings,averagedovera2.8yearperiodduringthedrought,(totaling12,489AF/yr)maybeattributabletoalloftheprohibitionsmandatedbythedroughtemergencyconservationregulations.Weassumethattheproposedregulationwouldresultincommensurateannualsavings.

AnalyticalBaselineTheBoard’sdroughtemergencywaterconservationregulationswerefirstadoptedinJuly2014.Sincethen,theemergencyregulationshavebeenreadoptedseveraltimes,mostrecentlyinFebruary2017.Forthemostpart,theprohibitedpracticesdidnotchangeastheregulationswereotherwisemodifiedandreadopted.InApril2017,inresponsetoGovernorBrown’sendingofthedroughtemergency(ExecutiveDepartment‐2017),theStateWaterBoardrescindedelementsofthedroughtemergencywaterconservationregulations,butnottheprohibitionsagainstwastefulwaterusepractices.Thoseprohibitions—addressingalmostexactlythesamewastefulwaterusepracticesastheproposedpermanentconservationregulations—remainineffectthroughNovember2017.Atthetimeofthisdocument’scirculation,theentireStateissubjecttotheseprohibitions.

However,becausethepurposeofthisdocumentistoanalyzetheeconomicimpactoftheproposedpermanentconservationregulations,theBoard’sdroughtemergencywaterconservationregulationshavebeenexcludedfromtheanalyticalbaseline.Theyare

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temporarymeasures,adoptedwhiletheGovernorhadsuspendedreviewforcertaindroughtemergencyactions,includingtheBoard’sdroughtemergencywaterconservationregulations.Thisanalysisdoes,however,considertheinfluenceofotherpolicymechanisms,inparticularthe2015UrbanWaterManagementPlans(UWMPs,orPlans),theprovisionsofwhichwillcontinuetobeinplaceregardlessoftheproposedregulation.Thus,theyareappropriatelypartoftheanalyticalbaseline.

AccordingtotheBoard’srandomsamplingofUWMPs,mostifnotallsuppliersalreadyprohibitsomeofthewastefulwaterusesaddressedbytheproposedregulation.UrbanwatersuppliershavebeenrequiredtodescribesuchrestrictionsintheirUWMPssince1983.TheWaterCoderequiresthePlanstoincludeinformationaboutdemandmanagementmeasuresincluding"waterwastepreventionordinances"(Wat.Code,§10631,subd.(f))and,aspartofdroughtcontingencyplanning,"….mandatoryprohibitionsagainstspecificwaterusepracticesduringwatershortages…."(Wat.Code,§10632).

Inserviceareaswhereurbanwatersuppliersalreadyprohibitthesamewastefulwaterusepracticesaswouldbeprohibitedbytheproposedregulation,thepermanentregulations’prohibitionswouldnotcreatenewobligationsorresponsesandwouldthereforenotcauseanyindependenteconomicimpact.

SampleofUrbanWaterManagementPlansTheStateWaterBoardrandomlysampledfortyUWMPsandreviewedwhetherthoseurbanwatersuppliersalreadyheldequivalentorsubstantivelysimilarprohibitionsagainstwastefulwateruses.TheBoarddevelopedassumptionsaboutthestatewidepresenceofequivalentprohibitionsfromtheanalysisofthe40‐samplesubsetofUWMPs.

AtthetimeoftheBoard’sanalysis,365ofthesePlanswerepublicallyavailableontheDepartmentofWaterResources(DWR)website.TheBoardcarefullyreviewed40ofthesePlans,orapproximately10percentofthetotal.TorandomlyselectthefortyPlans,theBoardfirstdividedthePlansintoquartilesbasedonserviceareapopulation.TheBoardthenselectedavaryingnumberofPlansfromeachquartile.ThenumberofPlansforeachquartilewasproportionaltothepopulationofthatquartilerelativetothetotalpopulationservedbythereportingurbanwatersuppliers.

Table15outlinesthequartileselectionmethod.Table16lists,inascendingorderofpopulation,theurbanwatersupplierswhosePlanstheWaterBoardreviewed.Italsoshowsservicepopulation.

Quartile Population %ofpopulationserved #ofsampledPlansQuartile1 Lessthan22,842 3.3% 1Quartile2 22,843to45,802 7.9% 4Quartile3 45,803to97,292 16.2% 7Quartile4 Morethan97,293 72.6% 28Total 5,118,246 100.0% 40

Table15:Quartileselectionmethod

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UrbanWaterSupplierName PopulationServed

RubioCanyonLandAndWaterAssociation 9,182GoldenStateWaterCompany‐SouthArcadia 26,930Burlingame,CityOf 31,109SanGabrielCountyWaterDistrict 39,238GoldenStateWaterCompany–Norwalk 45,514GoldenStateWaterCompany–Artesia 50,238ValleyCountyWaterDistrict 55,703CaliforniaWaterServiceCompanySouthSanFrancisco 61,223LaHabra,CityOf 61,843OlivenhainMunicipalWaterDistrict 70,522BuenaPark,CityOf 82,791Hesperia,CityOf 92,177ValenciaWaterCompany 97,300DesertWaterAgency 98,400GreatOaksWaterCompanyIncorporated 99,301CaliforniaWaterServiceCompanyChicoDistrict 102,155WalnutValleyWaterDistrict 102,622Torrance,CityOf 105,358DalyCity,CityOf 105,810Clovis,CityOf 108,227Antioch,CityOf 108,298PalmdaleWaterDistrict 118,227JurupaCommunityServiceDistrict 119,034SuburbanWaterSystems‐Whittier/LaMirada 120,710Roseville,CityOf 123,572VictorvilleWaterDistrict 128,005Fullerton,CityOf 140,827Sunnyvale,CityOf 148,028ElsinoreValleyMunicipalWaterDistrict 149,322SantaMargaritaWaterDistrict 156,949Corona,CityOf 167,764MoultonNiguelWaterDistrict 170,326CaliforniaWaterServiceCompanyStockton 170,414Stockton,CityOf 170,417LosAngelesCountyWaterworksDistrict40‐AntelopeValley 208,068OtayWaterDistrict 217,339Modesto,CityOf 259,187HelixWaterDistrict 270,375AlamedaCountyWaterDistrict 344,278IrvineRanchWaterDistrict 381,463TotalPopulationServedbySampledSuppliers 5,118,246Table16:UrbanWaterSupplierswhosePlanstheStateWaterBoardreviewed

TheStateWaterBoardexaminedtheplansofeachsupplierlistedinTable16,notingwhichoftheproposedprohibitedwastefulwateruseswerealreadypermanentlyprohibited,orwereprohibitedunderStage‐1droughtconditions.TheBoardassumesthatStage‐1

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conditionsarethe“newnormal,”givenanthropogenicclimatechangeincreasesdroughtriskinCalifornia.Thewarmanddryconditionsthatgaveriseto2012‐2015droughtarenotexceptional,butratherveryprobable(Diffenbaughetal.,2015).Hence,ifasupplerprohibitedoneoftheproposedprohibitionsunderStage‐1droughtconditions,weconsidereditprohibitedforallwatersupplyconditions.

AdjustmentFactorTheStateWaterBoardusedresultsfromtherandomsamplinganalysistoinferwhatpercentageofCaliforniansmaybeimpactedbythepermanentprohibitions.TheBoarddevelopedanadjustmentfactorof7.6,asshowninTable17below.Theadjustmentfactorisequaltoone(1)dividedbythe“samplepercent,”orthepercentofthestatepopulationrepresentedbythesample(i.e.,13.15percent,or5,118,246/38,907,642).TheBoardusedthatadjustmentfactortoinferstatewidenumbers.Forexample,inexaminingthesampledUWMPs,theBoardfoundthat4.9millionofthe5.1millioncustomersinthe“totalsamplepopulation”receivewaterfromsuppliersthatalreadyprohibittheuseofahosethatdispenseswatertowashamotorvehicle,exceptwherethehoseisfittedwithashut‐offnozzle.Toinferwhatpercentageoftheentirestatemightreceivewaterfromsuppliersthatalreadyrequireautomaticshut‐offnozzles,theBoardmultipliedtheaffectedsamplepopulation(e.g.,4.9million)bytheadjustmentfactor(i.e.,7.60),andthendividedthatfigure(37.24million)bythe2015population(38.9million).TheBoardinferredthat95.7percentofthestatereceiveswaterfromsuppliersthatalreadyrequireautomaticshutoffnozzles;and4.3percentofthestatereceiveswaterfromsuppliersthatdoNOT.

AdjustmentFactortoinferStatewideEstimatesfromSampleData POP1=TotalSamplePopulation(sumofthe40sampledSuppliers'populations)[SWRCBEconomistcalculation] 5,118,246

POP2=TotalStatePopulation[CADOF2017] 38,907,642

SamplePercent:PercentofStatePopulationrepresentedintheSample,POP1/POP2. 13.15%

AdjustmentFactor:FactortoadjusttheSampledpopulationdatauptotheStatewidelevel(1/SamplePercent)

7.60

Table17:InferenceAdjustmentFactor

NozzlesInordertoestimatethecostsassociatedwiththeprohibitionagainst“theuseofahosethatdispenseswatertowashamotorvehicle,exceptwherethehoseisfittedwithashut‐offnozzle…”(a.k.a.,theNozzleprohibition),theStateWaterBoardneededtodeterminehowmanyCaliforniahouseholdswouldbenewlysubject6tothisprohibition.Tomakethat

6“Newlysubject”inthattheyhavenotalreadybeensubjecttoasimilarprohibitionbytheirlocalsupplierormunicipality.Theestimatesinthissectionareconservativeinthattheentirestatehasbeensubjecttoanalmostidenticalemergencyregulation‐requiredprohibitionsince2014.Therefore,theestimatedstatewideone‐timecostassociatedwithpurchasingashut‐offnozzleforahosemaybeaslowaszero.AsdescribedintheAnalyticalBaselinesection,however,theBoard’sanalysisinthisdocumenthasremovedwatersavingsandresponsesattributabletotheBoard’semergencyregulations.Itdoes,however,considertheinfluenceofotherpolicymechanisms,inparticularthe2015UrbanWaterManagementPlans(UWMPs,orPlans),theprovisionsofwhichwillcontinuetobeinplaceregardlessoftheproposedregulation.

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determination,theBoardperformedaseriesofsimplecalculationsassumingthatthesampledurbanwatersupplierdatarepresenttheentirestate.

Inordertodeterminewhatpercentageofthestateisalreadysubjecttoasimilarlocalnozzleprohibition,theBoardreliedonarandomsampleoffortyUrbanWaterManagementPlans7(UWMPs).TheBoardthentalliedhowmanypeoplereceivewaterfromthesampledsuppliersthatdoNOTalreadyprohibitresidentialcarwashingwithoutanautomaticshut‐offnozzle(i.e.,5.1millionminus4.9million,or105,810).Afterdeterminingthenumberofpeoplewithinthe“totalsamplepopulation”whoareNOTalreadysubjecttothenozzleprohibition,theBoardmultipliedthatfigurebytheAdjustmentFactor(7.6),andinferredthat804,341Californiansmaybeaffectedbythenozzleprohibitions.

TheBoardassumedthatcustomersneedonlyonenozzleperhousehold.Thereare2.97peopleperhousehold(DOF2017),thustheBoardassumedthereare270,822households(i.e.,804,148/2.97)thatmightneedanozzletocomplywiththeproposedprohibition.Basedonconversationswithafewsuppliers,theBoardfurtherassumedthat75percentofthosehouseholdswouldnotactuallyneedanautomaticshutoffnozzle,asthosehouseholdswouldhavealreadypurchasednozzles,independentofanystateorsupplierrequirements.Inotherwords,theBoardassumes67,706(i.e.,270,822*25%)householdswouldneedtoacquireautomaticshutoffnozzles.

TheStateWaterBoardfurthermoreassumedthat50%ofthesehouseholdswouldpurchasenozzlesat$5.00/nozzleand50%wouldreceivethenozzlesfromsuppliers,whowouldpurchasethematawholesalepriceof$2.50/nozzle.

Usingtheseassumptions,householdswoulddirectlyspend$169,264onpurchasingautomaticshutoffnozzlesandsupplierswoulddirectlyspend$84,632.As85%ofurbanwatersuppliersarepublicentitiesand15%areprivate,$72,010ofsuppliernozzlecostswouldbefiscalcostsand$12,622economiccosts.Table18summarizesthesecostsandassumptions.TheBoardincludedthecostshighlightedinTable18toestimatetotaleconomicandfiscalcosts,asenteredinSectionsBandFofthe399.

STATEWIDEHouseholdsthatmightneedanozzle 270,822PercentofHouseholdsthatneedanozzle 25%

STATEWIDENumberofHouseholdsthatwouldneedanozzle 67,706PercentofNozzlespurchasedbySuppliers,bothPublicandPrivate 50.00%

STATEWIDENumberofNozzlespurchasedbyallSuppliers 33,853HouseholdPrice $5.00SupplierPrice $2.50

HouseholdDirectNozzleCost $169,264Supplier(Public+Private)DirectNozzleCost $84,632

PublicUrbanWaterSupplierNozzleCosts(Fiscal) $72,010PrivateUrbanWaterSupplierNozzleCosts(Economic) $12,622

Table18:EstimatedNozzleCosts

7UWMPscontainrequisiteWaterShortageContingencyAnalyses,inwhichurbanwatersuppliersmustdescribepermanentanddrought‐triggeredprohibitionsonend‐uses.SeepreviousWaterSavingsdiscussion.

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RestaurantsBasedontheresultsoftherandomlysampledUWMPs,32ofthe40(80%)ofthesuppliersalreadyprohibit“theservingofdrinkingwaterotherthanuponrequestineatingordrinkingestablishments….”Giventhat80%ofthesampledutilitiesalreadyhaveanequivalentorsubstantivelysimilarprohibitionin‐place,thatrelevantindustrygroupssuchastheCaliforniaRestaurantAssociationhaveexpressednoconcernaboutthisregulation,andthatthereisnoreadilyavailabledataorstudiesuponwhichtodisaggregateanyspecificcostattributabletothisparticularprohibition,theStateWaterBoarddidnotspecificallyincludetheimpactoftheserving‐water‐without‐askingprohibitioninthisanalysis.Rather,theBoardassumedanyimpactswouldbebasedonthetotalwatersavingsanalysis,totheextentthattheBoard’sgeneralestimateofwatersavingsduetotheprohibitionsenmassecapturesthewatersavingsofthisprohibitionspecifically(seeEstimatingAnnualWaterSavings).

HotelsandMotelsBasedontheresultsoftherandomlysampledUWMPs,26ofthe40(65%)ofthesuppliersalreadyrequirethathotelsandmotelsprovideguestswiththeoptionofhavingtowelsandlinenslaundered,andtheyprominentlydisplaythatoption.Giventhat—

65%ofthesampledutilitiesalreadyhaveanequivalentorsubstantivelysimilarrequirementin‐place;

RelevantindustrygroupssuchastheCaliforniaHotelandLodgingAssociationhaveexpressednoconcernoverthisregulation;

Freesignageand/orsamplein‐roomlanguageisavailablethroughindustryassociations,waterdistricts,andnationalprogramssuchasENERGYSTARandWaterSense;

Anyadditionalsignsoreducationalmaterialpurchasedbyahotelwouldbeaone‐timecost;and

Manyhotelsandmotelshavealreadyinvestedincompliantsignage,eitherindependentlyorinresponsetotheemergencydroughtconservationregulations,firstadoptedinJuly2014,extendedmultipletimes,andsettoexpireNovember2017,

—theStateWaterBoarddidnotseparatelyaccountforthepotentialimpactofthisrequirementinitsanalysis.Rather,theBoardassumedanyimpactswouldbebasedonthetotalwatersavingsanalysis,totheextentthatthegeneralestimateofwatersavingsduetotheprohibitionsenmassecapturesthewatersavingsofthisprohibitionspecifically(seeEstimatingAnnualWaterSavings).

MediansBasedontheresultsoftherandomlysampledUWMPs,only7ofthe40(17%)ofthesuppliersalreadyprohibit“theirrigationofturfonpublicstreetmediansorpublicallyownedormaintainedlandscapedareasbetweenthestreetandsidewalk….”Estimatingthe

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economicimpactofthisprohibitioniscomplicatedforanumberofreasons.First,theStateWaterBoarddoesnotknowandcannotreasonablyestimatehowmanyacresofpublicallyownedturfexistsonmediansinCalifornia.Thatdataisnotcurrentlyavailable,andcanonlybeestimatedusingexpensiveremotely‐sensedlandscapedatatheBoarddoesnothaveaccessto.TheanalysiswouldalsorequiresignificantsupportfromGISstaff,combinedwithsignificantoutreachtolocalgovernmentstoclarifywhohasresponsibilityforthemedian.

EveniftheBoardcouldestimateacreageandthelocations,itdoesnothavetheresourcestoestimatehowpublicentitieswouldrespondoncetheprohibitionbecomespermanent.Aninexpensiveoptionwouldbetostopwateringaturf‐onlymedianalltogether;amoreexpensiveoptionwouldbetoremovetheturfandreplaceitwithxeriscape.Therearemultipleoptionswithawide‐rangeofcosts.Theoptionsareaffectedbyanumberofvariables,suchaslocation,plantselection,publicopinion,theextentoftheaffectedarea,etc.Inordertodevelopassumptions,theBoardwouldhavetocommittoanextensiveresearchprojecttocollect(1)theacreagesandlocations,(2)broadestimatesofhowlocalentitieswouldrespond,or(3)theBoardwouldhavetoidentifyandcontactlocalentitiesdirectly.

Itispossiblethatthisparticularprohibitioncouldhaveaneconomicimpact.However,notknowinghowmanyacresofturfexistonpublicallyownedormaintainedmediansintheState,andbeingunabletodetermineandreasonablydistributecompliancecosts,theBoarddidnotattempttoquantifytheeconomicimpactofthisparticularprohibition.However,theBoardassumesthatmostaffectedmunicipalitiesandgovernmentalentitieswillchoosetheleast‐costlyresponse,andthatsomeportionoftheimpactswillbereflectedintotalwatersavingsanalysis.Theestimateofthetotalwatersavingsduetotheprohibitionswillincludesavingsfromthemedian‐prohibition(seeEstimatingAnnualWaterSavings).

OtherwastefuloutdoorwateruseThefollowingprohibitionsdonotnecessarilyrequiremarketpurchases;however,theywouldlikelyrequirebehavioralchanges.

• Theapplicationofwatertooutdoorlandscapesinamannerthatcausesrunoffsuchthatwaterflowsontoadjacentproperty,non‐irrigatedareas,privateandpublicwalkways,roadways,parkinglots,orstructures.

• Theapplicationofpotablewatertodrivewaysandsidewalks.• Theapplicationofwatertoirrigateturfandornamentallandscapesduringand

within48hoursaftermeasurablerainfallofatleastone‐tenthofaninch.

TheBoardrecognizesthatchangingcustomerbehaviorcanhavenon‐marketcosts.Forexample,theproposedregulationswouldrequireCalifornianstoirrigatetheirlandscapeswithoutcausingrunoff.Preventingrunoffmayrequireapersontosetasidethetimetoadjustahomeirrigationsystemortopayaprofessionaltodoso.TheBoarddoesnothavethedataneededtoestimatethepotentialeconomicimpactforeachoftheseprohibitions.

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Similarly,theBoarddoesnothavedataregardinghowmanyCalifornianswouldneedtoadjustirrigationsystemstopreventrunoff,howlongitwouldtaketheaveragepersontoadjustawastefulsystem,whatthesepeoplewouldotherwisebedoingduringthattime,andwhattheeconomicimpactofthesupplantedactivitieswouldbe.

Theprohibitionsagainstirrigationwhileit’srainingandirrigationthatcausesrunoffcouldalsoresultinaffectedwaterusershiringalandscapeirrigationprofessionaltoadjust,repairand/orreplacewastefulirrigationsystems.However,theBoardhasnodataorstudiesuponwhichtoestimateimpactstoLandscapeIrrigationBusinessesforreasonsdescribedinthefollowingsub‐section.

Giventhat—

95%ofthesampledutilitiesalreadyhaveanequivalentorsubstantivelysimilarprohibitionagainst“theapplicationofwatertooutdoorlandscapesinamannerthatcausesrunoffsuchthatwaterflowsontoadjacentproperty,….”

98%ofthesampledutilitiesalreadyhaveanequivalentorsubstantivelysimilarprohibitionagainst“theapplicationofpotablewatertohardscapes…”

ThemajorityofNPDESMS4PhaseIPermitsandthePhaseIIGeneralPermitalreadyprohibitsubstantivelysimilarwastefulwaterusesasamechanismtocontroldry‐weatherurbanrunoffandprotectwaterquality(SeeAppendixAofInitialStudy/NegativeDeclarationAnalyzingtheImpactofPermanentlyProhibitingCertainWastefulWaterUsePractices);and

TheBoardcannotreasonablyestimatetheeconomicimpactofanybehaviorchangescatalyzedbytheaforementionedprohibitions,northeeconomicimpactoftheprohibitionsonlandscapeirrigationbusinesses

—theStateWaterBoarddidnotseparatelyaccountforthepotentialimpactofthe“runoff”and“hardscapes”prohibtionsinitsanalysis.Rather,theBoardassumedanyimpactswouldbebasedonthetotalwatersavingsanalysis,totheextentthatthegeneralestimateofwatersavingsduetotheprohibitionsenmassecapturesthewatersavingsoftheseprohibitionsspecifically.Asonly40percentofthesampledutilitiesincludedintheirUWMPsanequivalentorsubstantivelysimilarprohibitionagainstirrigationduringandwithin48hoursaftermeasurablerainfall,WaterBoarddidspecificallyaccountitsimpact(seeEstimatingAnnualWaterSavings).

LandscapeIrrigationBusinessesThefollowingprohibitionsmayaffectlandscapeirrigationbusinesses:



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TheBoarddeterminedthatestimatingstatewideeconomicimpactsoftheaforementionedprohibitionsonlandscapeirrigationbusinessesisnotfeasible.Anychangesinthelandscapeindustrywoulddependgreatlyonhow,andwhere,affectedcustomersrespond.AsdescribedintheMediansandOtherwastefuloutdoorwaterusesub‐sections,Californiansmayrespondinavarietywaystoeachoftheprohibitions(e.g.,bylettingtheirlawngobrown,byindividuallyadjustingawastefulirrigationsystem,byhiringaprofessionaltoadjustawastefulirrigationsystem,and/orbyreplacingalawnwithxeriscape,etc.).Furthermore,thecostsandbenefitsofeachresponsewilldifferdependingonanumberofvariables,includingprojectdifficulty,personalpreference,location,plantselection,andprojectscale.TheBoarddidnotattempttoquantifytheeconomicimpactoftheaforementionedprohibitionsonlandscapeirrigationbusinesses,givensuchvariablecostsandinadequateandunavailabledata.

However,theaforementionedprohibitionsmaybeneficiallyimpactlandscapeirrigationbusinesses.Ina2015documentpreparedfortheStateWaterBoard,ExecutiveOrderB‐29‐15StateofEmergencyDuetoSevereDroughtConditions:EconomicImpactAnalysis,theauthorsfindthatexpenditurestousewatermoreefficientlyoutdoorswillbenefitthelandscapingsector,byhelpingto“catalyzeanew,droughtorientedsub‐sectorofthelandscapingservicessector,therebycreatingnewemployment,aswellas,overtime,likelyreducingpricesforthistypeofamenity”(Moss2015).

FountainsBasedontheresultsoftherandomlysampledUWMPs,35ofthe40(87%)ofthesuppliersalreadyprohibit“theuseofpotablewaterinanornamentalfountainorotherdecorativewaterfeature,exceptwherethewaterispartofarecirculatingsystem.”Giventhat—

87%ofthesampledutilitiesalreadyhaveanequivalentorsubstantivelysimilarprohibitioninplace;

Residentialfountainshavealmostuniversallyusedrecirculatingsystemsfordecades;

BasedonasmallsurveyofCAutilities,fewpublicfountainsusenon‐recirculating(or,in‐line)systems;and

Thecostofretrofittingahistoricin‐linepublicfountainisprohibitivelyhigh.Ratherthanretrofitthosefountainstocomplywiththeproposedregulation,thesurveyedutilitieshavealreadyandwouldinthefutureletin‐linefountainsrundry,

—theStateWaterBoarddidnotspecificallyincludetheimpactofthefountainprohibitioninthisanalysis.Rather,theBoardassumedanyimpactswouldbebasedonthetotalwatersavingsanalysis,totheextentthatthegeneralestimateofwatersavingsduetothe

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prohibitionsenmassecapturesthewatersavingsofthisprohibitionspecifically(seeEstimatingAnnualWaterSavings).

PenaltiesTheproposedregulationsalsoprohibitthefollowingactions:

Cities,counties,andcitiesandcountiesmaynotpreventorpunishresidentsforwaterconservationinviolationofexistingstatutes.

Homeowners’associationsmaynotpreventorpunishresidentsforlandscapingthatreduceswateringduringadeclareddroughtemergencyinviolationofexistingstatutesorpreventorpunishresidentsforwaterconservationinviolationofcertainexistingstatutes.

Undertheproposedregulation,violatingtheregulation’sprohibitionswouldbeaninfractionpunishablebyafineofuptofivehundreddollars($500)foreachdayinwhichtheviolationoccurs.Theemergencyconservationregulationsprohibitedthesameactionsandassignedthesamepenalty(SeeCal.CodeRegs.,tit.23,§864,subd.(d).).SincetheadoptionoftheemergencyconservationregulationsinJuly2014,theBoardhasnotitselfinitiatedenforcementforanallegedviolationoftheprohibitions.Furthermore,itappearsthat,basedonthemonthlyreportsofsuppliersrequiredbytheemergencyregulationsandseparatecommunicationswithsuppliers,thesmallnumberofmonetarypenaltiesthatwereissuedduringthedroughtbylocalpublicagencieswerelargely,ifnotexclusively,inresponsetolocalordinancesandnottheemergencyregulations.However,unlikewiththeBoard’semergencyregulations,theproposedregulationwouldnotgrantlocalpublicagenciesenforcementauthority.

TheBoardassumestheconsequencesofnon‐compliancewillcontinuetodeterwould‐beviolators,andthattheBoardwillnothavetoissuefinesinthefuture,orwouldatmostissueasmallnumberofmonetarypenaltiesthatwouldhaveademinimisstatewideeconomicimpact.Accordingly,theBoardassumesanyimpactswouldbeaccountedforinthetotalwatersavingsanalysis,totheextentthatourgeneralestimateofwatersavingsduetotheprohibitionsenmassecapturesthewatersavingsoftheseprohibitionsspecifically(seeEstimatingAnnualWaterSavings).

EnforcementTheproposedregulationdoesnotrequireenforcementbytheStateWaterBoard,nordoesitempowersupplierstoenforcetheprohibitionsonbehalfoftheBoard(SeeWat.Code,§377[authorizingpublicentitiestoenforcecertainlocalordinancesandresolutionandemergencyregulationsadoptedbytheStateWaterBoard]).SincetheadoptionoftheemergencyconservationregulationsinJuly2014,theStateWaterBoardhasnotitselfinitiatedenforcementproceedingsforviolationsofanyoftheprohibitionsagainstwastefulwateruses.WhiletheStateWaterBoardstandsreadytoinitiateenforcementactionsforviolationsofitsregulations,basedonitsexperiencewiththedroughtemergencywaterconservationregulations,anyenforcementoftheproposedregulationwouldbeperformed

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withexistingresourcesincludingbystaffwho,withtheliftingoftheemergencyconservationregulationsinNovember2017,willhavethecapacitytoprovidecomplianceassistance,includingenforcementwhereappropriate.

PercentagepublicandprivateurbanwatersuppliersUrbanwatersuppliersinCaliforniaarecomprisedpublicandprivateutilities.TheStateWaterBoardestimatesthaturbanwatersuppliersthataregovernmentalagencies(public)wouldincurapproximately85percentofthetotalcoststourbanwatersuppliers.Investor‐ownedutilitiesandprivatelyownedmutualwatercompanies(private)wouldincur15percentofthetotalimpact.

RevenueLossesToestimaterevenuelosses,theStateWaterBoardreliedona2017documentsharedwiththeBoardbyM.Cubed.M.CubedsurveyedCalifornia’surbanretailwatersuppliers,collectinginformationonwaterratesandpopulationserved(Mitchell2017).M.Cubeddetailedthewaterratesineitherdollarsperhundredcubicfeet($/CCF),dollarsperhundredgallons($/CG),ordollarsperthousandgallons($/TG),andincludedadditionalinformation,suchassupplierhydrologicregionandcounty.UsingtheM.Cubeddata,theStateWaterBoardconvertedallratesintodollarsperacrefoot($/AF),groupedthesuppliersbyhydrologicregion,andthenestimatedthemedianwaterrateforeachregion.

TheWaterBoardusedthemedianwaterratetoestimatetherevenuesupplierswouldloseascustomersceasedthewastefulwaterpracticeslistedintheproposedregulation.TheBoardassumedthat,ascustomerseliminatedtheprohibitedpracticesinthefirstyearoftheregulation’simplementation,watersupplierswouldloserevenueequaltonetrevenueloss($/AF)multipliedbyanticipatedwatersavings(AF)(seeEstimatingAnnualWaterSavings).ColumnCinTable19showsgrossrevenuelostinthefirstyear($/year).

HydrologicRegions

SavingsduetotheProhibitions(AF)

GrossRevenueLoss($lost/AF)

GrossRevenueLoss($lost/yr)

A B C

CentralCoast 463 $1,649 $763,487ColoradoRiver 409 $730 $298,570NorthCoast 98 $1,015 $99,470NorthLahontan 30 $552 $16,560SacramentoRiver 1,795 $582 $1,044,690SanFranciscoBay 2,054 $1,922 $3,947,788SanJoaquinRiver 840 $647 $543,480SouthCoast 5,426 $1,184 $6,424,384SouthLahontan 300 $870 $261,000TulareLake 1,074 $304 $326,496Totals 12,489 13,721,641Table19:MedianSupplierRevenueLossbyHydrologicRegion

Thegrossrevenuelossrateisequaltothemedianwaterrateforeachhydrologicregion,basedontheaforementionedM.Cubedsurvey.

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TheWaterBoard’srevenuelosscalculationlikelyoverestimatesthecostoftheproposedregulation.TheBoardassumedallurbanwatersupplierpricestructuresdonotreflectfixedcosts.Inthisscenario,urbanwatersupplierswouldrelyoncashreservestocoverfixedcostsinthefirstyearoftheregulation’simplementation;inthesecondyear,theywouldrolloutposthocrateadjustmentsandsurchargestorecoverthepreviousyear’srevenueshortfalls.Thisconservativeassumptionlikelyoverestimatestheproposedregulation’scosts.Inreality,someurbanwatersuppliersmaintainpricestructuresthatbetter,ifnotentirely,reflectfixedcosts.Forsuchsuppliers,conservationwouldnotcompromisetheirnetfinancialposition,asanyrevenuelosseswouldbeoffsetbyvariablecostsavings.ArecentsurveycompletedbythePublicPolicyInstituteofCaliforniasuggeststhatmanyCaliforniautilitiesdopricewatertoadequatelycoverfixedcosts.Ofthoseutilitiessurveyed,35percentreportedthatthedroughtandthestate’sconservationmandatedidnotimpairtheirnetfinancialposition(Mitchelletal.2017).

VariableCostSavingsTheStateWaterBoardestimatedvariablecostsavings,$/AF,duetonon‐deliveryofwaternolongerneededbycustomersasaresultoftheprohibiteduses.Thevariablecostsavingsvaluescomefroma2016documentpreparedfortheBoardbyM.Cubed,ProposedRegulatoryFrameworkforExtendedEmergencyRegulationforUrbanWaterConservation:FiscalandEconomicAnalysis[Mitchell2016].Onpg.17,theauthorsexplainvariableproductioncosts,writing“revenuelossestimates(mustbe)adjustedtoremovevariablecostsavingsassumedtobe$200perAFinmostregions,and$250intheSouthCoast,CentralCoast,andSanFranciscoBayregions.Thesecostssavingsareprimarilyreducedenergyandoperatingexpensesassociatedwithnotconveying,pumping,treating,anddistributingthewater.”Afterdistributingthewatersavingsacrossthehydrologicregions(StateWaterBoardsortedthedatabyregion),thetotalannualvariablecostsavingswereestimatedtobe$2,894,884.SeeTable20.

HydrologicRegions VariableCostSavings($/AF)

AFperYearSavedduetoProhibitions

VariableCostSavings,$/yr

CentralCoast $250 463 $115,627ColoradoRiver $200 409 $81,711NorthCoast $200 98 $19,682NorthLahontan $200 30 $5,998SacramentoRiver $200 1,795 $359,065SanFranciscoBay $250 2,054 $513,389SanJoaquinRiver $200 840 $168,083SouthCoast $250 5,426 $1,356,561SouthLahontan $200 300 $59,934TulareLake $200 1,074 $214,833Totals: 12,489 $2,894,884Table20:VariableCostSavingsbyHydrologicRegion

OffsetDemandSavingsTheCaliforniaDepartmentofFinance(DOF)projectsthatthestatewillgrowatanannualizedrateof0.76percent,adding6.5millionpeopleby2036(DOF2017).California’surbanwateruse(includingresidentialuseandcommercial,industrialandintuitional(CII)

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use)averaged5.6millionacrefeet(MAF)between2013and2016.IfthatwaterwereequallyproportionedamongCalifornia’s39.4millionpeople(2016population),thestate’sannualurbanpercapitausewouldbeabout0.14acrefeet,or42,360gallons,peryear.

Tomeettheincreasingdemandofagrowingpopulation,California’surbanwatersuppliersmayneedmorewater—perhapsasmuchas45,500acrefeetperyear((0.14AF*6.5millionpeople)/20years).Additionalsupplycouldcomefromnewsourcessuchasexpandedsurfacewaterstorage,recycledwater,anddesalination;itcouldalsocomefromthemoreefficientuseofalreadydevelopedsupplies.Urbanwatersuppliersunderstandthatconservationisthecheapestandmostreadilyavailablesourceof“new”water,andhaveaccordinglyinvestedindemandmanagementprograms,includingconservationactivitiessuchaseducationandoutreachefforts,householdaudits,andrebatesforfixtures,appliances,andturf.

Theproposedregulationmayresultinannualwatersavingsthat,statewide,couldmeetmorethan25%ofannualfuturewaterneeds(i.e.,(12,489/45,500)*100=27%).However,onasupplier‐by‐supplierbasis,theannualsavingsarenotassignificant,representinglessthan0.25percentofasupplier’sannualproduction(SeeTable21).TheWaterBoardassumesthat,toobtainsuchrelativelysmallvolumesof“new”water,anurbanwatersupplierwouldnotinvestinexpensivenewinfrastructuresuchasdam;rather,thatsupplierwouldmoderatelyexpandthescopeofitsdemandmanagementprogram.

StatewideWaterProduction,June2014‐May2015(AF) 5,884,413TotalSavingsduetotheprohibitions(AF/yr) 12,489TotalPopulation(servedbyurbanwatersuppliersin2015) 35,489,411

Distributionofwatersavingsinproportiontopopulationserved Numberof

suppliersPercentofpopulationserved=

PercentofTotalSavingsSavings

Range(AF)TotalSavings

(AF)

1 11.21% 500‐1,400 1,40014 23.95% 100‐499 2,99135 18.63% 50‐99 2,326359 46.22% 0‐49 5,772

Total 409 100% 12,489Table21:Suppliersavingsrelativetosupplierproduction.TheWaterBoardassumestheproposedregulationwouldresultinannualstatewidesavingsof12,489AF,andthatsupplierswouldseesavingsinproportiontothepopulationtheyserve.Forexample,in2015,theLosAngelesDepartmentofWaterandPower(LADWP)servedover4millionpeople(or11.21%ofthe“totalpopulation”).TheproposedregulationmayhelpLADWPconserveabout1,400AF/yr,orabout0.22percentoftheirtotal2015demandof614,800AF(LADWP2015).Theproposedregulationmayhelpthemajorityofurbanwatersuppliers(i.e.,359ofthe409)eachconservelessthan50AF/year.Forexample,in2015,theCityofDavisservedover69thousandpeople(orabout0.1%ofthe“totalpopulation”).Asaresultoftheproposedregulation,theCityofDavismayconserve23.5AF/yr,orabout0.25percentoftheirtotal2015demandof9,212AF/year(CityofDavis2015).

TheStateWaterBoardassumestheproposedregulationwouldsaveavolumeofwaterthatanurbansupplierwouldotherwiseonlyrealisticallyobtainbyexpandingitsdemandmanagementprogram.Therefore,urbansuppliersmayrealizeadditionalfinancialsavings

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equaltodelayed,oroffset,demandmanagementprogrammingcosts.TheWaterBoardassumesthatthefinancialsavingsassociatedwithnothavingtoindependentlyinvestinasimilareffort(i.e.,localrestrictionsonparticularwateruses)wouldberelativelyinexpensive.Inotherwords,thecostofpromulgatinglocalrestrictionswouldbemorelikelytomirrorthecostoflower‐boundconservationactivities(e.g.,educationandoutreachprograms)ratherthanthecostofhigher‐boundconservationactivities(e.g.,residentialturfreplacementrebates).TheWaterBoardusedanestimatedlowerboundcostof$381/AF(DWR2013b).SeeTable22.

HydrologicRegions OffsetDemandSavings($/AF)

AFperYearSavedduetoProhibitions(AF)

OffsetDemandSavings($/yr)

CentralCoast $381 463 $176,094ColoradoRiver $381 409 $155,551NorthCoast $381 98 $37,468NorthLahontan $381 30 $11,418SacramentoRiver $381 1,795 $683,546SanFranciscoBay $381 2,054 $781,864SanJoaquinRiver $381 840 $319,976SouthCoast $381 5,426 $2,065,969SouthLahontan $381 300 $114,096TulareLake $381 1,074 $408,974Totals: 12,489 $4,754,957Table22:OffsetDemandSavingsbyHydrologicRegion

AdjustedservicechargesWatersuppliercostsareeitherfixedorvariabledependingonthecharacteristicsoftheirexpenditures.Fixedcostsremainrelativelyunchangedthroughouttheyear,irrespectiveofthevolumeofwaterproduced;theyincludeexpenditurestobuildinfrastructure.Variablecostsvarydirectlywiththevolumeofwaterproduced;theyincludeexpendituressuchaselectricalandchemicalcosts.

TheStateWaterBoardassumestheestimatedannualsavingsarethesameyearafteryear(see“Annual”watersavings).Specifically,theBoardestimatesthat,inthefirstyearoftheregulation’simplementation,thesesavingswillresultinsuppliergrossrevenuelossesof$13,721,641(SeeRevenueLosses).TheBoardassumessupplierswillrecouptheselossesthroughaone‐timesurchargeduringthesecondyearoftheregulation’simplementation.Thereafter,theBoardassumessupplierswillincreasefixedservicechargessotheycancontinuetocoverfixedcosts.However,theBoardassumesthat,becausecustomerswouldbeconsuminglesswater,theirtotalcostswouldnotincreaseduetoincreasedfixedchargesthatresultfromtheproposedregulation.

One‐timeSurchargesTheStateWaterBoardestimatestheproposedregulationwouldresultingrossrevenuelossesof$13,721,641(SeeRevenueLosses).Specifically,theBoardassumessupplierswillrecouptheselossesthroughaone‐timesurchargeduringthesecondyearoftheregulation’simplementation.TheBoardalsoestimatesthattheproposedregulationwouldresultinwatersupplierspurchasingautomaticshut‐offnozzlesresultingina$84,632cost

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duringthefirstyearoftheregulation’simplementation.Becausethisisasmallcost,andtheBoardisassumingthatsupplierswouldberecoupingtheirrevenuelossesafterthosehavebeenquantified,theBoardsimilarlyassumessupplierswillrecouptheirnozzle‐purchasecoststhroughaone‐timesurchargeduringthefirstyearoftheregulation’simplementation.

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CitedWorksBaerenklau,K.,Schwabe,K.,andA.Dinar(2013).DoIncreasingBlockRateWaterBudgetsReduceResidentialWaterDemand?ACaseStudyinSouthernCalifornia.WaterScienceandPolicyCenterWorkingPaper,01‐0913.CADOF2017:CADepartmentofFinance,Forecasting,Demographics,Data,Estimates,TableName=E‐1cities,Counties,andtheStatePopulationEstimateswithAnnualPercentChangeretrieved3/10/2017fromhttp://www.dof.ca.gov/Forecasting/Demographics/Estimates/E‐1/

CASWRCBWaterProductionandConservationReporting,CurrentReportingData,June2014–July2017UrbanWaterSupplierReportDataset(Excel)availableathttp://www.waterboards.ca.gov/water_issues/programs/conservation_portal/conservation_reporting.shtml

Censusa,2015:USCensusBureau,2015CountyBusinessPatternsforNAICS722511(FullServiceRestaurants).Onlycountedonesinserviceareasthatdonothavethewaterprohibition.

Censusb,2015:USCensusBureau,2015CountyBusinessPatternsforNAICS721110(Hotels&Motelsexcludingcasinos).Onlycountedonesinserviceareasthatdonothavethewaterprohibition.

CityofDavis,2015.UrbanWaterManagementPlan(UWMP).https://wuedata.water.ca.gov/public/uwmp_attachments/4281583487/Davis%202015%20UWMP_FINAL‐20160613.pdf

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DWR2013a,CaliforniaWaterPlanUpdate2013,Volume1,Chapter3,page3‐11.Providesdefinitionofhydrologicregion.Fordetailedinformationabouteachofthe10regions,SeeVolume2‐RegionalReports.Note:Twelveregionsarelisted,howevertwoare"overlays",dataassembledforspecificanalyticalpurposesdifferentfromthecurrentstudy.http://www.water.ca.gov/waterplan/cwpu2013/final/

DWR2013b,CaliforniaWaterPlanUpdate2013,Volume3,Chapter3.UrbanWaterUseEfficiency,page3‐32.The2008dollarswereinflatedto2015andenteredintothetable.http://www.water.ca.gov/waterplan/docs/cwpu2013/Final/Vol3_Ch03_UrbanWUE.pdf

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