Thus, under these assumptions, the current tiered rates should accurately reflect the marginal price that the wasteful users are willing to pay, and any rise in price would result in a decrease in consumption.
We could do away with usage tiers, but then we'd have to fund the missing utility revenue out of state/local budgets.
Although, for states with modern-sized populations, managing and funding water infrastructure at the state level seems to make more sense.
Yes, that means rich people fund the system. Ideally instead of just paying for staff and maintenance, this also funds new sources of water, like desalination plants, which benefit everyone in a drought.
I mean, you don't want poor people paying for that stuff, right? For one thing, they don't have the money.
It seems like this could be solved by having improvements paid for by people who don't mind paying so much and would like more water. And in a drought, it means there is more supply, as well as people who can cut back on water usage without much sacrifice.
Yes, it's absurd to think about charging ex. $50k a gallon for gallons over 10k, but that's basically a cap. No one has the money.
(But yes, I'd say we should implement caps rather than being ridiculous)
I think there are two or three issues bundled into one here. One is that water is managed at the district level. Districts are a patchwork of county, city, and private entities, some with elected leaderships, some with appointed leadership. The state has no direct control over water use in this way, although they have significant authority in other ways that can very much impact water use. However, that authority is split between a set of state agencies that have research and policy power, but no regulatory authority, and an elected/ appointed state water board that is just chasing the next election cycle. Finally, at the district level, these organizations are just a hot mess. Its a complete clusterfck of frankly, shockingly arcane methods for assessing and managing water (ever heard the term miners inch?). Half of these districts barely know where their water is going. I see the whole mess as a failure of neoliberalism, an undue faith in markets.
Aside from the 9000lb gorilla of ag/industrial versus urban/ suburban water use, I think that its clear that tiered rate based structures are a clear failure. We knew this half a decade ago, but its become impeccably clear with articles like these.
Its very very easy to see blame the millionaire/ elite class in this situation, but its important to acknowledge that the fact that these homes use 20-40% of a water districts total use has been well known for years. Likewise, water districts are not incentivised to decrease this class of water users overall use because that 20-40% of water use might represent 60%+ of a water districts total income. This is due to tiered rates. The reality is that famous person XYZ never ever sees the water bill and they just don't care. This is something one of their assistants or manager deals with, and relative to their income, even if their water bill is 50k a month, it just doesn't matter.
So to be clear, districts, through tiered rates, have been incentivised to not act on who they already know are their most wasteful customers. Those most wasteful customers do not care how they spend on water a month.