Stanford Woods Institute for the Environment

Stanford Woods Institute for the Environment

The Path to Water Innovation

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The Path to Water Innovation

October 20, 2014

Authors:
Barton "Buzz" Thompson, Newsha Ajami, David G. Victor

Increased water scarcity means that the water sector will need to find ways to do more with less.
Innovative new technologies promoting efficiency and conservation can address these challenges and help the
nation continue to grow in the face of scarce water supply. However, the cultivation of an innovation-friendly
environment in the water sector is hindered by inefficient water pricing, counterintuitive regulations promoting
status quo technologies, and limited access to capital for financing research and development. To reform water
pricing policies, the authors propose pricing schemes that capture the full cost of providing water, the adoption
of pricing structures that force consumers to confront the marginal cost of their water usage, and decoupling
utility revenue from sales targets. In addition, to make water regulations more innovation-friendly, the authors
propose a statewide review of regulatory practices and in some cases implementation of statewide offices of
innovation. Finally, the authors propose levying a public benefit surcharge on water use to raise public
investment in research and development, buy down the cost of new technologies, and attract private capital.