Max writes*
On the first day of 2022, residents of Zurich saw their water bill shrink by 15%. With numerous water economists pointing to price increases as a solution to water scarcity, how did the Swiss achieve this reduction? Two words: effective governance.
Much like ancient Athens, Switzerland is a direct democracy [pdf] wherein its political decisions are made by citizens with less of a reliance on representatives. This is encapsulated by quarterly federal referendums (the United States has never held a federal-level referendum). When it comes to water management, the federal government has little authority as most cantons and municipalities hold the discretion to design policy that works best for their communities. This policy is guided by the frequent canton and municipal level referendums which have enabled the country to properly manage its rich water resources.
The vote of the people has resulted in a 2019 veto of the privatization of the Zurich water utility (WVZ) by the local government. The inhabitants of Zurich believe that water should not be a for-profit commodity and that its price should reflect necessary revenue for operation and maintenance. This explains the decision to reduce the water consumption fee by 15%.
The matter was put up for a vote in 2021. However, this time representatives were involved. The City Council of Zurich applied to the Municipal Council to make revisions to the Water Tax Ordinance and the Water Tariff. Both of these councils are elected by the residents of Zurich and decisions made can be challenged by residents. Furthermore, residents hold the right of revocation which can be used to dissolve the local government and install a new one if the government does not live up to its promises.
The Municipal Council voted in favor of the revisions reducing the water tariff by 15% starting in 2022. In Zurich, customer tariffs are made up of a consumption fee and an annual basic fee. The Council’s decision resulted in consumption fees being reduced from 1.08 CHF (1.16 USD) to 0.92 CHF (0.99 USD) per m3 of water. The annual basic fee remained largely unchanged. This reduced the average cost of water per m3 from 2 CHF (2.14 USD) to approximately 1.6 CHF (1.72 USD).
The healthy financial performance of the WVZ enabled this change. Efficient water infrastructure as well as less-frequent leakage problems have made the utility more cost-efficient. Another contributing factor to the decision is that Zurich continues to benefit from an abundant supply [pdf] of water. These supplies are significantly larger than the water demand of 160 liters [pdf] per day per resident.
Power to the people sounds great but what is to stop people from making water free and abusing its abundance? While the local government holds most of the decision-making authority regarding water policy, the Supreme Court can step in if things fall completely astray. Moreover, given the supply and demand outlined above, the price of water could likely be reduced further. But the Swiss are aware of their responsibility to protect precious water resources and ensure supply for generations to come so it’s being kept at a break-even point.
Bottom Line: The Swiss system of governance has allowed the residents of Zurich to have a direct say in the city’s water policy and benefit from reduced water prices. Prices remain low for now but in the future, they can be adjusted to reflect scarcity.
* Please help my Water Scarcity students by commenting on unclear analysis, alternative perspectives, better data sources, or maybe just saying something nice 🙂
Dear Max,
I was hooked while reading your blog post. It is very interesting to see a country/city doing the ‘opposite’ of what should be done, in regards to pricing water, especially when we have been discussing in class that the most probable solution to solving water scarcity is pricing.
Allowing residents to have a direct say in the city’s water policy sounds ideal, and is a great way to get the local community involved in the issue. Yet this of course will create some problems, as individuals will always want the offer that benefits them the most. I am very interested to see how and most importantly when Switzerland will start implementing water conservation plans, as the scarcity of this resource is inevitable for the future.
I looked up the yearly water use of the Netherlands vs Switzerland, and the Netherlands uses almost 4 times the amount Switzerland does – of course keeping in mind that Switzerland’s population is half of the former. However, this shows that perhaps low prices of water does not necessarily equal to high usage. I wonder if other countries have similar situations, where the population has such a heavy say in the water system – if yes, it could be interesting to compare similarities/ differences of them in your report.
Overall, I really enjoyed reading this post, it was well-written and I was happy to learn about something new!
Hey @Zoe — it’s always helpful to compare drinking water use PER CAPITA, to control for population 🙂
makes sense ! i’ll know that for next time, thanks 🙂