Water Resources Research Act Program

Details for Project ID 2019AK014B

Rural Alaskan households’ economic energy-water nexus

Institute: Alaska
Year Established: 2019 Start Date: 2019-09-01 End Date: 2020-04-30
Total Federal Funds: $11,000 Total Non-Federal Funds: $22,000

Principal Investigators: Barbara Johnson

Project Summary: Introduction: Quantitative evidence suggests that factors besides the price of water services impact rural Alaskan users’ demand. This has significant implications for the financial sustainability of rural water utilities, which depend on user fees to cover their annual operations and maintenance costs. The fees are set by dividing the annual costs by the number of users, and implicitly assume that access to water services are a financial priority for users. Ethnographic studies found that households prioritize paying for energy, in the form of electricity and fuel, over paying for water services. The interviews also revealed that access to alternative water sources decreased users’ demand for water services. Anecdotal evidence suggests that the amount of disposable income available also impacts users demand. Objectives: The objectives of this research project are to quantitatively determine: 1. The impact of electricity and fuel prices on users’ demand for water services; 2. The impact of the Permanent Fund Dividend payments (PFD) on utilities’ revenue; 3. The impact of access to alternative water sources on users’ demand for water services. Methods: Data will be collected for the years 2000-2017 on the collection rate of water utilities and revenue rates, flat fee rates charged to households for water services, rates charged to other users for water services, the price of electricity per kw/h, with and without Power Cost Equalization (PCE) payments, price of gas per gallon, PFD payments, the presence of alternative water sources. The data will be obtained from the Department of Environmental Conservations’ Village Safe Water program, the Department of Commerce, Community and Economic Development and the Regulator Commission of Alaska. All dollar values will be adjusted for inflation and converted to 2017-dollar values. A regression analysis will be performed to analyze the time-series data. Statistical tests will be performed to ensure that the Ordinary Least Square Classical Assumptions hold. The DurbinWatson test will be used to test for serial correlation of the error terms. If serial correlation is present, it will be corrected using either the Cochrane-Orcutt or the Hildreth-Lu procedure. Results: It is hypothesized that the results will show that: 1. An increase in the price of energy will correlate with a decrease in water utilities’ collection rate, which are used as a proxy for household’s demand for water services; 2. Higher PFD payments will correlate with an increase in water utilities’ collection rate; 3. The presence of alternative water sources will negatively impact household’s demand for piped water services. Conclusion: This study will quantify indirect energy-water linkages at the household level, which can help inform the understanding of these linkages in rural Alaska. If the price of fuel and electricity impact demand for water services, further research investigating the impact of this nexus on food provision is warranted. In rural Alaska, food provision is energy intensive, both in terms of fuel used to engage in subsistence activities or transport food items to communities, and human energy used to gather the food.