Water Economics: The Pricing Puzzle

Amy Lefringhouse: 00:06

Welcome to another episode of the Everyday Environment podcast where we explore the environment we see every day. I'm your host, Amy Lefringhouse.

Abigail Garofalo: 00:14

And I'm your cohost, Abigail Garofalo.

Amy Lefringhouse: 00:16

And today, we have a really interesting topic that we are going to quote dive into since our theme is water. I feel like we've said that almost every single episode possibly. But we have Margaret Schneemann here with us today, and she is the water resources economist with Illinois Extension and Illinois Indiana Sea Grant. So with that, we want to say welcome, Margaret. Thank you so much for being with us today.

Margaret Schneemann: 00:46

Thank you so much for having me.

Amy Lefringhouse: 00:49

Well, we really want to know more about what you do with Sea Grant and with the Illinois Extension. Tell us about your job.

Margaret Schneemann: 00:59

Yeah. So as you say, my title is water resource economist. I am a environmental economist by training, but what I do by trade is really urban planning. My in my position, I am located in Chicago, and I'm located at an agency called the Chicago Metropolitan Agency for Planning, and they are the designated planning agency for the greater Chicago region. So, really, most of my effort goes towards assisting CMAP as in terms of leading economic analyses to support develop the development and implementation of sustainable water and water supply planning for the Chicago region.

Margaret Schneemann: 01:37

And whether that's planning at the state level, the regional level, the subregional level, or at the county and local level, really assisting all those levels of government and folks with water supply planning.

Abigail Garofalo: 01:52

So making sure communities, different municipalities have enough water for their residents. Is that kind of what we're thinking here?

Margaret Schneemann: 02:00

Yeah. Well, we can't really assure that communities have enough water, but we can provide outreach to them in terms of what we know about our water supply sources. And also on the socioeconomic side, which is my specialty on the economic side, really leveraging our data about what we know about socioeconomics. So what do we know about population growth? What do we know about employment growth?

Margaret Schneemann: 02:27

And how is that growth gonna influence water demand? And combining that water demand information with what we know about available water supply to see if there's going to be enough water, if there's going to be a shortage of water, and then helping communities address what they might need to do.

Amy Lefringhouse: 02:45

As far as money. Right? Like, you're thinking like, oh gosh. How are they going to pay for the water supply infrastructure and all that that stuff too? So there's like a million different pieces of data that you're putting together like a puzzle.

Amy Lefringhouse: 03:02

Right?

Margaret Schneemann: 03:03

Correct. You really hit the nail on the head. There's really two things to attend to. So one is what we would consider the geographical problem, is really with how much water is there physically in the earth, but then that second piece is really this water needs to somehow get extracted, pumped, treated, and delivered to Illinois residences and businesses, and of course, that requires infrastructure. So that requires a water treatment plant.

Margaret Schneemann: 03:32

It requires pipes. It requires pumps. Yeah. And so how are we going to pay for all that infrastructure? What is the capacity of that infrastructure to meet demand?

Margaret Schneemann: 03:43

So lots of issues to detangle about providing water.

Abigail Garofalo: 03:48

Yeah. What a great culmination of all the things we've been talking at the high season. Right? We've talked with the, like, community planning. We've talked about storm water.

Abigail Garofalo: 03:57

We've talked about just sustainable development, things like that. A lot of the things we talk about is the aging infrastructure or how does it get from one place to another, and wow, you're just this is just great thoughts on, oh, okay. Like, here's how we get there, and here's all the pieces that kind of come together as part of a puzzle to get the water where we needed to go and to also take into account the the existing pieces that are there too.

Margaret Schneemann: 04:23

Yeah. Absolutely. I was

Amy Lefringhouse: 04:24

just thinking about, you know, when we turn on our tap water, there's a lot of work that is done behind the scenes to make that happen. And, again, I've said this in other podcasts this season, but we sometimes take it for granted.

Margaret Schneemann: 04:38

Oh, absolutely. Yes. The perception that water is just there that you could walk over up here in Chicago to Lake Michigan and just put a cup in the lake and drink the water. Obviously, I don't know too many people who would do that. Really understanding the huge amount of work that our water systems need to do to extract, like I said, extract that water, pump that water, treat that water, deliver that water just from source to tap on appreciating the level of effort and the cost to really get that done.

Abigail Garofalo: 05:13

Mhmm. So speaking of cost too, why why is water pricing important?

Margaret Schneemann: 05:18

Sure. Well, there's lots of reasons that price of water is important. Because I'm an economist, I might just explain that prices matter. Right? So economists think a lot about prices.

Margaret Schneemann: 05:30

In economics, we really view prices as providing an economic incentive that can both explain people's behavior as well as influence people's behavior. And so this really means that the price of something sends us a signal that we then react to. So for example, when prices rise, we buy less. If prices fall, we tend to buy more. And in economics, we call that the law of demand.

Margaret Schneemann: 05:52

So this law really holds true for everything, even things that are essential and necessary for life like water. Because water is essential and we need it to live, it really makes pricing of water even more of an important issue. Water's unique. It still does follow the law of demand, meaning if the price of water rises, we buy less. But obviously, there's only so much less water we can buy.

Margaret Schneemann: 06:15

Right? We may be able to cut back on discretionary uses of water such as watering our lawns or using water outside to play in the summer. We try to be more efficient with water. Right? We could install low flow toilets or turn the tap off when we brush our teeth as some examples.

Margaret Schneemann: 06:31

But at some point, we really do need water, and we're going to have to get that water for our essential uses like drinking, cooking, and cleaning, and we're gonna have to pay the price for it.

Amy Lefringhouse: 06:43

Gosh. This brings me back to I took an environmental economics class in college. And, you know, when you're going into environmental science or natural resources or whatever, you're taking lots of science classes, right? And I was like, no, no, no, I'm learning about all the then I took economics, I was like, what? What is all of this that we have to take into consideration when we're trying to figure out and find solutions for environmental challenges?

Amy Lefringhouse: 07:10

So this is just like bringing me back to those days, Margaret, where my instructor or my professor was teaching me about the cost of recycling, you know.

Margaret Schneemann: 07:20

I will I will confess that what I'm trying to explain when I first learned this concept in undergrad, did almost drop my economics course, and the concept I'm trying to get at is what we call the price elasticity of demand, and it was really a lot to take in. So with water, when we talk about the law of demand and behavior and that incentive that prices send to people, water, again, is unique because when the price rises, you're still gonna follow the law of demand and buy less, but there's only so far demand can fall. Right? Because people need the water. It's a necessity.

Margaret Schneemann: 07:57

We say that demand for water is price inelastic. Demand's gonna fall, but it can only fall so far.

Amy Lefringhouse: 08:03

Well, how do you then determine the price of water? I mean, gosh, this is like a simple question probably with a very complex answer. But in layman's terms, Margaret, how how is that price determined?

Margaret Schneemann: 08:18

Right. In theory, we know a lot about water pricing. There's really exhaustive industry guidance available in terms of best management practices for setting water rates. For example, an industry organization such as the American Water Works Association has standards of practice manuals on water rate setting best practices. But in terms of what is actually happening on the ground in our communities with setting water prices, we actually don't know that much about how communities here in Illinois are setting water rates.

Margaret Schneemann: 08:52

There's no requirement that communities actually follow these best practices. Communities have a lot of discretion in in what they do to actually set water prices.

Abigail Garofalo: 09:01

So it could kind of be it's it could be like an an abstract determinant, but what are the essential, I guess, like, factors that people might wanna look at when looking at water pricing?

Margaret Schneemann: 09:11

In terms of thinking about water pricing, the most important water pricing principle is something we call full cost water pricing, and that is the number one objective of water prices, meaning that at the end of the day, why are we charging for water? We're charging for water because we need revenue. Why do we need revenue? Well, we need to pay for all these things that we talked about earlier. Right?

Margaret Schneemann: 09:36

That that we need to pay for the pumps, for the treatment, for the chemicals, to treat the water, for the energy, to deliver the water. So none of that is free. Infrastructure, of course, as we alluded to earlier, a lot of the infrastructure has been in the ground for hundreds of years. We have the aging infrastructure situation. On top of that, we have lead service line replacement act, which is requiring water utilities to inventory and replace lead service lines.

Margaret Schneemann: 10:06

We have emerging chemicals, like forever chemicals, like PFAS that we water utilities are now going to have to address. So, of course, all of that costs costs money. One of the interesting things in Illinois about water pricing is that in many states, water utilities are actually regulated because water utilities are public utilities. Many states do regulate water utilities at the state level, and that does lend some transparency in terms of what utilities are actually doing to set those rates and to ensure that utilities are covering all those costs that I just mentioned of pumping, treating, storing, and delivering water. But in Illinois, we do not regulate our water utilities.

Margaret Schneemann: 10:52

We do not regulate our public water utilities. We do regulate our private utilities at the state level. So what this means is that even though public water utilities are not regulated in Illinois at the state level, they are regulated at the local level by utility governing boards and city councils, and that's really where the rate setting happens. Sometimes the rates are set by the water utility staff working with the community finance departments. Sometimes they commission a rate study to an external consultant, and sometimes they actually look at the water prices of neighboring or similar communities to help them guide what they think the price of water should be, which is a process that's called benchmarking.

Margaret Schneemann: 11:33

I also wanna mention that we talk about water price, but it is important to know that there is no one single price for water. What water utilities do is set a schedule of prices in a process called rate setting. You can think of an analogy, like, if when you go to the state fair or an amusement park, you pay a price for admission just to get into the event, but then you also buy tickets to use to to be able to do certain rides like bumper cars. Right? And this is exactly how water pricing works.

Margaret Schneemann: 12:03

So, typically, there's a fixed charge per billing period, whether that's a month, bimonthly, quarterly, and then you're paying another charge for an additional volume or unit of water you're consuming. And so I'm gonna talk about economics again, but in economics, we call this two part pricing. Right? So there's actually no one water price. We actually in in the example I just gave, we have those two water prices, that fixed price and a volume price, and the majority of water suppliers in Illinois do do two part pricing.

Margaret Schneemann: 12:33

The idea to get back to when we're talking about cost, the idea behind full cost pricing is that that fixed charge is meant to cover those water infrastructure costs. So things like the treatment plant, the water tower, the infrastructure, the pumps and pipes, and so all of those capital costs. That yeah. And that volume charge is then meant to cover operation and maintenance costs, so things like the chemicals, the energy, salaries, so all the all of those costs that will vary depending on the volume of water that people are consuming.

Amy Lefringhouse: 13:07

Makes sense. Yeah. Makes sense.

Abigail Garofalo: 13:08

And then if you could clarify for me, when you're talking about, like, public versus private utilities, how do I know if I have, like, a public or a private utility, like, supplying my water?

Margaret Schneemann: 13:19

So that is such a great question. I think the issue of public and private is often misunderstood. Water itself, of course, is public. Water itself is owned by the people of Illinois, and the state of Illinois manages and protects the waters on on the people's behalf. So, of course, water itself is public, but as we've been talking, we need water infrastructure to be able to access that water.

Margaret Schneemann: 13:43

We cannot just go out I mean, you can obviously, like, have a private well in your backyard that you drill, but you, of course, have to pay the drilling costs, manage that, treat it yourself. Right? So when we say public and private in the context of water, we're really talking about ownership of that water infrastructure. Is it a public entity that that owns infrastructure, meaning a municipality? And that's part of what the municipality does.

Margaret Schneemann: 14:10

Or is it a private water utility, which is investor owned? Something like Aqua Illinois or Illinois American Water here in Illinois are privately owned utilities that are managed by investors rather than by a local unit of government as a community water utility would be.

Abigail Garofalo: 14:28

Oh, interesting. I never thought about how they were regulated differently. That's my situation is half of my community has public, and half of my community is is through Illinois American Water, and, like, that's I was I was like, what's the difference? It's just what? And so it's yeah.

Abigail Garofalo: 14:44

That's really helpful to understand and to know just as a consumer, right, of, like, water where does my water come from?

Margaret Schneemann: 14:51

Alright. And so for water pricing, just to I might be going into this way too much. I get a lot of questions about it, though, but private water utilities are regulated by the Illinois Commerce Commission, which means they have to file a rate case. The rate case gets reviewed and approved. You can access all of that information online, whereas a public water utility is not regulated at the state level.

Margaret Schneemann: 15:16

So all of that is happening, as I said, in in board meetings, city council meetings. One thing that means for the cost of water is that private water utilities are then able to put a a return to investment into their water rates, which is you could think of it as like a profit margin because why why would you purchase infrastructure? Right? If they're investing in infrastructure, and so they're entitled to a return on investment for doing so. And so one of the things that often comes up with water pricing differentials between public and private utilities is that allowed return on investment.

Margaret Schneemann: 15:56

So a community would not get that. And so when we think about why do we have the aging infrastructure issue, right, we do see that for a lot of the water infrastructure in terms of detecting and fixing leaks has been deferred, and that means that we do have a higher chance of water leaks and things like that as well of, of course, going back to the lead service line replacement. Right? A lot of those pipes having been put in and not updated decades and decades ago. So there has been a deferred infrastructure investment for our water infrastructure, which is the bill for that is really coming due for a lot of water utilities now.

Margaret Schneemann: 16:35

And the question of how are we going to pay for that is really out there. The money has to come from somewhere. Right? We did recently have one of the largest investments in water infrastructure come from the federal government, but that is typically not the case. The vast majority of revenue for water infrastructure does come from rate payers at the local level.

Margaret Schneemann: 17:00

So when we price water at a rate that doesn't provide sufficient revenue for infrastructure upkeep, we do see the infrastructure deteriorating and then a larger cost down the road when we start to see issues with that aging infrastructure.

Abigail Garofalo: 17:16

And that makes me think too. I was thinking about how, well, you don't really move to a community and say, well, I'm moving here because the water price is the water price I want it to be versus I'm gonna move because the water price is not what I want it to be. That's typically not what you hear from people. So this like you were mentioning, it's not a typical economic, like, supply and demand scenario. Right?

Abigail Garofalo: 17:37

It's got that what was that term you used? Elastic demand? Inelastic. Inelastic. The opposite of what I said.

Amy Lefringhouse: 17:43

Basically, you have to buy it whatever the price. Right? I mean, like you have to have that water to survive, and you have to have it. So we wanna make sure that the prices are fair so that everyone has access to water. Is that accurate, Margaret, to an extent?

Margaret Schneemann: 18:04

Yeah. Yeah. There's a couple of things in there. So so one one thing I heard was, like, you wouldn't typically think about water price when you're thinking about where to locate, and I do think the reason for that is because water is really a huge deal, especially municipal water. I don't have the figures right in front of me, but if you compared you know, if you went and bought bottled water in a store, right, a gallon of bottled water costs what? Never I never do those

Abigail Garofalo: 18:30

I don't either. Like, I got this. I got the Internet at my at my fingertips.

Margaret Schneemann: 18:35

Yeah. See, I this is why I I I always drink tap water, so I don't know the price of bottled water. A gallon of bottled water might cost you $2-3.

Amy Lefringhouse: 18:44

I wanna say $2. That's my guess. What is it, Abigail?

Abigail Garofalo: 18:46

It's it's like between 3 and a little over over a dollar, like, depending on where you buy it from. So it's like 1.50 to, like, $3.

Margaret Schneemann: 18:56

Okay. So let's just say, like, $2 for a gallon of water. Now a gallon of water out of your tap is gonna cost you how much? So one of the things I do is I maintain a database of water rates. I don't know offhand the price of a gallon, but typically, like, we're we charge for a thousand gallons.

Margaret Schneemann: 19:18

I think the average for a thousand gallons might be something like $5, so divide five by a thousand. Okay. So rounding up. Okay. So it's a half a cent per gallon.

Margaret Schneemann: 19:28

So so water is such a great deal, and this is I I do also wanna mention that the water you buy in the store is not required to meet EPA drinking water standards Right. Whereas the water coming from your tap is. So for half a cent, you could have a gallon of water that meets that you know is meeting standards. So that is incredible. Right?

Margaret Schneemann: 19:50

I mean, this really speaks to what a great job we do do with water supply. However, the price of water has been escalating faster faster than inflation and consumer incomes. So we know from our water affordability work that we've done where we've looked at those rates that it may not you know, we have one thing, which is what is the level of water prices, but then we have how much are they growing. So they are growing rapidly and more rapid than inflation, and that does cause this concern with water affordability and then water burden or people's ability to pay water bills. Now why is that?

Margaret Schneemann: 20:31

Right? Why is water increasing at such a fast rate? Because of this issue we've been talking about with the aging infrastructure. So all the deferred maintenance is the bill for that's coming due. We've, again, seen legislation with with needing to replace the lead service lines.

Margaret Schneemann: 20:46

And then also, our water quality has been degrading. Right? And so as our water quality gets more and more degraded, we still, we have more and more regulation of emerging contaminants, and that's more water treatment that we have to do, and that's more expensive.

Abigail Garofalo: 21:06

And when you say quality, you're talking about, like, the sourcing. Right? Like, the water that we're bringing in initially, that's degrading, and so it's causing more treatments to have to occur in order to actually get it to the consumer

Margaret Schneemann: 21:18

at a certain level. Correct. And it's a little bit of a squirrel hole, but, you know, you could talk you could talk about, you know, why is is water quality falling. So, you know, we have really three sources of basic sources of water in Illinois. Right?

Margaret Schneemann: 21:32

We have groundwater, and we can divide that into deep and shallow. And then we have surface water. We have rivers and lakes. Right? So we know many areas of the state are groundwater is being over pumped, which means the water levels in the aquifers are falling.

Margaret Schneemann: 21:47

As that happens, the water starts experiencing water quality issues that could be more salinity, You could start getting arsenic and other contaminants in there, and then you may need to do, you know, all kinds of additional treatment that you didn't have to do when the aquifer had more water in it. We then see if that water just becomes prohibitive or you you just can't get the well deep enough, which is a situation we're seeing in Will County and Joliet where wells were actually starting to go dry. They made a decision to switch water sources, and then, of course, you have to build out the infrastructure to do that. Right? And so that is millions of dollars to switch water sources.

Margaret Schneemann: 22:32

And if you're going from groundwater or surface water source, of course, surface water can be more prone to pollutants, things like from stormwater runoff, certainly shallow groundwater aquifer. We're having huge issues with chlorides from icing is a is a big issue we see. And then as I mentioned with the PFAS, seeing higher levels with of that with surface water. So yeah. So so we have a whole bunch of things basically driving up the cost of water, and we're gonna see that coming through in the price of water pricing.

Abigail Garofalo: 23:05

And what are some ways that we are kind of helping, I guess, like, diffuse those costs to or are there ways that we can, like, make it a little more, like, fair water pricing, or is there is it just kind of, like, it's the consumers, unfortunately, like, gonna have to bear the brunt of it? Is that just kinda where we're at? Like, what's what are we looking at here, I guess?

Margaret Schneemann: 23:24

Yeah. So, actually, there's been, in the past few years, as water prices have been escalating, a lot of discussion about what the price of water should be, what does fairness mean, what does equitable mean, what does affordable mean. And so, really, the biggest challenge I see with this is actually getting on the same page with what we mean by fair and affordable. Right? How are we actually defining that, and what does that mean?

Margaret Schneemann: 23:53

And then the second biggest challenge is really how do we operationalize that definition in our water rate setting practices and policy? So thinking about fairness, one of the things that I've noticed is, like, everyone really has a different idea of what fair means. Right? In the water industry, the concept of fairness relates to a very tangible thing in water rate setting which is called equitable water rate setting. And what the water industry considers equitable water rate setting to be is that everyone pays an amount for their water that represents the cost that they impose on the water system to actually provide that water.

Margaret Schneemann: 24:32

So as we're talking about, if you use more water, you'll pay more because it does take energy to pump that water, the additional chemicals to treat that water. Likewise, if you require more water pressure or greater readiness to serve in terms of, like, percent capacity that you're using to pump water from the system, an example would be a car wash. Right? So a car wash needs more pressure and maybe two or three times the size of pipe that a resident might need, you pay more. Right?

Margaret Schneemann: 24:58

Because that infrastructure is going to be more expensive. Another example I often use is suppose you have a community. They're building a huge new subdivision outside of town that has a new school and maybe other amenities, and you need to lay new water pipes. Do you want grandma who's been living in town in the same house for forty years on social security to pay for that infrastructure? Right?

Margaret Schneemann: 25:21

That doesn't seem fair, does it? But maybe you do. Right? Maybe you do want Grandmountown to pay for that because maybe the community's priority is economic development, and you've agreed to waive the fees for the developer and the new residents for the water infrastructure because you wanna attract new residents, you want economic growth, you want more tax dollars, and maybe all that will help grandma in town avoid a property tax increase. Right?

Margaret Schneemann: 25:45

Because she won't have to pay as much property tax. So we could talk about a lot of different scenarios, but it really starts to get kinda complicated in terms of what we think fair is. On the other end of the spectrum, because water is a necessity, we need it to live. Water affordability advocates argue that water bills should really not unduly burden people. And what we mean by that is that the cost of water should not be so high as to cause you to make a choice or a trade off between paying your water bill and purchasing other necessities like medicine, paying your rent, buying food.

Margaret Schneemann: 26:23

Some even go so far as to argue that water should be free because it's a necessity and needed for life. And we do actually have one community in Illinois where water is free to residents. So as I mentioned, one of the data products I do is a database of water rates, and I always always get calls when I provide that data to people and emails saying, oh my gosh, Margaret, you messed up the data. There's something that's obviously wrong here because the price is zero. And they have to explain, no, no, that's not a mistake.

Margaret Schneemann: 26:52

The price of water in this community for residents actually is zero. Well, how can that be possible? Right? How how is it possible they can give water for free? Well, turns out that this community has a very, very large industrial customer and there's very few residents, and so they're able to fully cover the cost of the water utility from the revenue they receive from the industry.

Margaret Schneemann: 27:16

Well, obviously, this is a really unique case. Right? Not every community in Illinois looks like that. Every community in Illinois is different in terms of their water customer profile. Right?

Margaret Schneemann: 27:26

How many residents or what kind of industries they have. Very different in terms of land use, socioeconomics, the age of their infrastructure. Some communities have newer infrastructure. Some have older. We're just talking about water source.

Margaret Schneemann: 27:38

Right? So some might have wells that are much deeper and so on. It goes on and on. So all of these differences that we see across communities are really relevant to when we talk about what's fair. And what might seem fair to one community Right.

Margaret Schneemann: 27:53

May not seem fair fair to another. So, anyway, yeah, all of that is is to say, really, I think the biggest challenge in implementing fair water pricing is really getting on the same page with what does fair mean and then taking that differ that definition of fair and being able to operationalize it in your rate setting and policy.

Amy Lefringhouse: 28:13

Yeah. And, gosh, every community is so different. That gave me a, like, I got a little stressed out because community leaders really need to pay attention to these things and they themselves have to take a lot of information about their community's priorities and, you know, the water information that you're supplying and making those decisions, it sounds very challenging.

Margaret Schneemann: 28:38

It is. It it can be very confusing. And I mentioned benchmarking earlier, so there is a perception there can be a perception that a well water price should be the same. Right? Water is water, and so every utility should have the same rate.

Margaret Schneemann: 28:51

And in fact, recently, we just completed a water rate study for the state of Illinois that was authorized by house bill. And and under that that and part of the reason that that study was authorized was because people were noticing the huge amount of variation in water rates across the state of Illinois. And so this study, which was led by the Government Finance Research Center at the University of Illinois, and I was a technical adviser to that study, really dove into all those differences we're talking about in terms of what are those factors influencing water prices. But yeah. So so as I say, because every community is so different, there really can be no one water price that's gonna make sense for every community.

Margaret Schneemann: 29:42

Another thing is every community has its own objectives. I mentioned economic development objectives. Right? We're really asking a lot of our water rates. The first thing we would like water rates to do is bring in enough revenue to cover the cost of the system.

Margaret Schneemann: 29:57

Right? But what are costs? Right? So if I ask you how much does it cost you how much does your car cost or how much does it cost you to run your car? You might say, oh, yeah.

Margaret Schneemann: 30:08

I bought that. That car's you know, my car's worth $10,000. It's a old Toyota Camry. I bought it years ago. It's a 2015.

Margaret Schneemann: 30:18

It's not worth that much. Right? But really, like, what is the cost of that car? Is it what you paid for it back in 2015? Is it what you would pay for it today?

Margaret Schneemann: 30:27

Are you considering depreciation? And then have you also thought about the cost to run that car? Right? Is the cost to run that car your car payment? Is it your car payment plus insurance?

Margaret Schneemann: 30:38

Is it your car payment plus insurance plus doing maintenance such as oil changes, putting the gas in the car to make it run? So, really, we have a situation where all of these costs really, like, may not be consistently being considered by communities. So in terms of deferred maintenance, you think about not doing an oil change, right, on your car for ten years. Right? And so that's that's really the analogy to think about.

Margaret Schneemann: 31:02

If if communities have low water prices, that may be due to them deferring needed maintenance and things of that nature. But because water prices are voted on in city councils, there's a political aspect to water rates. So if you you know, no mayor wants to be the mayor that didn't get reelected because they they raised water prices. Right? So we do have this political aspect to water rate setting that can send an incentive for communities to keep water rates low and not completely cover costs.

Amy Lefringhouse: 31:39

What are you seeing in the future as far as, you know, evolving water prices, but also maybe new innovations or technologies when it comes to water pricing.

Margaret Schneemann: 31:51

Sure. So I'm just an economist, so I'll stick to that part. Could talk a little bit about

Abigail Garofalo: 31:58

You aren't a fortune teller?

Amy Lefringhouse: 32:00

Can you tell the future?

Margaret Schneemann: 32:02

Economists seem to have a really bad track record with that. But I will go out on a limb and say, I think one thing I've seen that is I'm very hopeful about and I expect to keep seeing is that water industry people and water affordability advocates are really starting to get on the same page with this issue and starting to craft solutions together in terms of understanding in terms of, for example, water affordability advocates understanding all these costs and all the challenges that the water industry is facing, but also the water industry understanding the need to not just set rates that cover costs, but also to provide water access to people and ensuring that nobody is water burdened. And so I do think this trend of the water industry and water affordability advocates continuing to work together and get on the same page will will continue. In terms of innovation, I'd be curious to hear what an engineer has to say, but Mhmm. One of the things I'm kind of excited about that I think I've seen is that metering technology is really evolving very quickly.

Margaret Schneemann: 33:13

You could think about water meters as the cash registers of the water utility. Right? And so when the registers aren't ringing up properly, there's gonna be inefficiency. Another interesting thing with the water industry is with water billing. Imagine fernology that you only find out how many groceries are in your cart after the cashier rings you up and tells you you have to pay, and you can't put any groceries back.

Margaret Schneemann: 33:36

You have to pay for it. Right?

Amy Lefringhouse: 33:38

Do I have enough money to cover it? Right? You're like, oh, no.

Margaret Schneemann: 33:42

Exactly. But you can't put them back. Can't put them back. Yeah. When you're at the grocery store, you could put something back, but you can't put the water back because you've already used it.

Margaret Schneemann: 33:52

And so most to go back to metering, most water customers really only have a rough idea. You know, if there is a leak or something, they may not find out until they get the bill. So when there's e infrequent billing, infrequent meter reading, This can lead to a lot of confusion and surprise when you're getting that water bill. So, yeah, I think the advances in metering technology can really help close that gap in time between when the water's being used and when you're getting that bill, and that'll really help people be able to find and fix leaks and also improve that incentive message it should be coming from water prices so that they could cut back earlier rather than later.

Amy Lefringhouse: 34:32

It was really interesting just to hear how complex it is when we're, you know, the ones that just receive a a bill in the mail. So kudos to you for doing all the hard work behind the scenes for us to have Water at our taps.

Abigail Garofalo: 34:50

I feel like, Margaret, you really like spreadsheets. I'm just gonna throw it out there. Say it out to the world. Say you really say

Margaret Schneemann: 34:58

I do wanna say I don't only do data collection, I also do technical assistance to communities to help them address this issue. Mhmm. And so we could definitely take a look at water rates and work with the community to tweak that tweak the rate to have more affordable rates. So, for example, they could offer an essential amount of water at a lower price or even provide an essential amount of water for free.

Margaret Schneemann: 35:24

The community could also use census data incomes and take a look at people's ability to pay and then tailor the water bills accordingly. And then we also do work with communities to pair affordable rates with other policies such as waiving the fee to turn water back on if it's been turned off due to nonpayment, even having a moratorium on water shutoffs altogether. They can make sure that customers are aware of assistance programs such as the Illinois Low Income Household Water Assistance Program or LIHWAP, or they could even create their own local assistance program to supplement what's available at the state level. So, yeah, so we do also work with communities to explore not only how they could tweak the rate, but also how they could pair that with other policy solutions to make sure that water in the community remains affordable.

Amy Lefringhouse: 36:16

Sure. That's that's great to know, Margaret, because some of our listeners might be in positions where, you know, they may even serve on on city councils or work for the municipality or then or even just just residents can can talk to their council members or advocate for that, you know, in their communities. And and to know that service is available through extension is yeah. It's really it's really great. We thank you, Margaret, for being here with us and and shining this light on on something that we don't think about every day.

Amy Lefringhouse: 36:48

I was I actually really thought that was really interesting to learn about. And I'm just I feel like every single podcast at the end, I'm always like, oh my gosh. I could learn more about that after I get off here. But we thank you for being here, Margaret.

Margaret Schneemann: 37:04

Thank you. Thank you so much for having me. It's been fun.

Amy Lefringhouse: 37:07

Well, we're gonna wrap up like we do at in each episode with our everyday observation where we highlight the mundane and normal of our environment that is actually really interesting. So, Abigail, what do you've got? What kind of everyday observation do you wanna share with us today?

Abigail Garofalo: 37:23

Yeah. So I took a little walk before recording this podcast because it is 52 degrees outside. Just for everyone, all of our listeners reference, it is, like, January 30 when we're recording today, so 52 degrees. The January is a little odd, and so I was like, I have to get outside, and oh, by the way, I need an everyday observation. So I'm walking I'm walking around my neighborhood, and it was like I live in a fairly urban setting, and so I was hearing cars and lots of things, and then I birds in the distance, but not really close, and then I'm walking, and I hear just massive amounts of twitter paiting, just bird bird bird bird bird bird bird bird bird

Abigail Garofalo: 38:05

And I was like, what? Like, that is so weird. And so I was walking, I just kept thinking, wonder why, like, what about that spot made it, like, really attractive to birds. Are there other spots that I can find? Things like that.

Abigail Garofalo: 38:16

And by the end of my walk, I figured out it was like hedgerows, you know, like people have at the end of their street or at the end right right by the sidewalk that's like just and probably invasive, previously planted thirty, forty years ago hedge rows that the birds are just using as really nice cover, and they're really active because it's warm, and spring's starting to kick in in their brains just a little bit, and so they were like, this is the safest place to be because it's nice in coverage, and I'm sure they were not, you know, like, you know, birds you'd find out in an open woodland or things like that. They're very much urban birds. Sure. But it was really cool to see that correlation between or I guess yeah. I guess, like, to see that, like, when we're near these hedgerows, that's when I was hearing all these Yeah.

Abigail Garofalo: 39:02

Sounds. And so just, yeah, a little bit of observation around my neighborhood.

Amy Lefringhouse: 39:07

Awesome. Well, what about you, Margaret? What's your everyday observation?

Margaret Schneemann: 39:11

Oh my gosh. So mine also has to do with birds, which is totally funny. So up here in Chicago, it has been getting warmer in Chicago, but it in earlier in January, it was really, really cold, and so I was spending a lot of time just looking out the window, I guess, at birds. And so one day, I see a bird and it looks like a cardinal, which I love because they're so pretty, right? So I go to get a closer look and I'm like, wait a second, it's so weird, I think there's I'm not sure if it's a male cardinal or a female cardinal or what's going on.

Margaret Schneemann: 39:45

So I get my binoculars and look, and this cardinal was half red, so how you would expect a male cardinal to look, and then half brown and gray, how you you would expect a female cardinal to be, and I had never seen anything like that. At first, I thought I was losing my eyesight, so I actually took a picture, and then I Googled it, because I like, what is going on? I'm so I actually learned something new looking it up. I'm probably going to get this pronunciation wrong, but this is a condition called bilateral gynandromorphia, gynandromorph And a bilateral gynandromorph is an organism that has one side of its body that's male, and the other side that's female, and apparently this is rare, but not it happens with cardinals, I guess.

Margaret Schneemann: 40:38

Wow. Yeah. Amazing.

Abigail Garofalo: 40:41

That was so special. Isn't that this special?

Margaret Schneemann: 40:44

Yeah, I was I had never seen anything like that before. Thought that was so interesting. And then another interesting thing was that that this condition, they believe it's been increasing in frequency as the weather has been getting warmer. So they do think it's connected to changing weather patterns as well, which I thought was interesting.

Amy Lefringhouse: 41:24

Any day observation. That is true. Happen anytime.

Margaret Schneemann: 41:28

But you can look at your bird feeder every day to yes.

Amy Lefringhouse: 41:34

That's pretty amazing. Well, I'm going to round it out because mine's about birds as well. So it's you know, the time of year where trees are dormant. It's like kind of drab outside, so you have to find something cool to look for right in nature, so you're like, what can we find? And I know we've talked about this in other everyday observations, but, you know nest watching right now or nest finding, nest searching right now is like amazing, and you can see all the different nests, know, kind of like the silhouettes of the nests up in the trees.

Amy Lefringhouse: 42:09

In fact, yesterday, I think, or two days ago, we were looking at eagles because I live on the Mississippi River, and there there's a lots of eagles over here. And I mean, we saw at least four or five eagle nests. They're they're just they're everywhere around here. But I went on the Christmas bird count with one of my fellow naturalists, and we were taking a ride up this old back road, gravel road along a stream, and we look up and we saw an oriole pouch nest hanging kind of over top. I mean, obviously it's not in use right now because they're not around here, but it was hanging there over top of a of the road, which was right near a stream.

Amy Lefringhouse: 42:55

And my friend said, oh, I think that they lots of times, you know, weave their nests or build their nests near running water, and lots of times they're kind of hanging out over running water. And then we saw two more the rest of the day. We saw three oriole nests that day just hanging out over the stream. So that was that was really cool. It's just a neat, you know, different, I guess, shape, I guess, if you will, or different type of nest where they hang down in a pouch and and lay eggs in in that hanging pouch nest, so that's kinda cool.

Abigail Garofalo: 43:35

So it's also so special. Yeah. That's so special, Amy. Look. Yeah.

Amy Lefringhouse: 43:41

Is cool. But again, if you're not outside and looking around and being observant and kind of like looking for those nests and things, you might miss those types of nests or the cardinals that Margaret seeing or even the birds, you know, flocking to the hedges. So anyway.

Margaret Schneemann: 43:59

That is so true. All I got sorry. All I got was last summer was Robin's nest, but they did do two batches of Oh. Fledglings. But every day, yeah, it was pretty exciting to go out every day and and watch the birds, like, watch them sitting there, watch them hatch, watch them grow, and then one day they were gone.

Amy Lefringhouse: 44:20

I know. I love it. I love it. Well, thank you again, Margaret, for being here. This has been another episode on the Everyday Environment Podcast.

Amy Lefringhouse: 44:29

Check us out next week where we talk with Peggy Anesi. She will talk to us about water education and community outreach.

Abigail Garofalo: 44:39

This podcast is a University of Illinois Extension production, hosted and edited by Abigail Garofalo, Erin Garrett, and Amy Lefringhouse.