This document presents the findings of a pilot study conducted by Housing New Zealand Corporation (HNZC) and Manukau Water Limited (MWL) to analyze water usage patterns of HNZC tenants compared to non-HNZC households. The study focused on households in the Mangere East area. Initial results found that the average daily water consumption of HNZC households was 60% higher than non-HNZC households. A higher percentage of HNZC households fell into the "high" and "very high" usage categories. However, the authors note that further per capita analysis is needed before conclusions can be drawn, as household occupancy rates may differ between the two groups. If HNZC tenants are ultimately found to use more

1. 1
Asset Engineer – Planning, Manukau Water Limited, Private Bag 94010, Manukau
2240, New Zealand. Ph: +649 262 5499 extn 7459, Fax: +649 2625752,
priscilla.chung@manukauwater.co.nz
HOUSING NEW ZEALAND CORPORATION AND MANUKAU WATER
LIMITED CASE STUDY: WATER DEMAND MANAGEMENT – DO
CONSUMERS CARE?
Priscilla Chung, BE(Hon)1
Abstract
Housing New Zealand Corporation (HNZC), in collaboration with Manukau Water
Limited (MWL) launched a water usage study in early 2007, to test the hypothesis,
“that HNZC tenants, in not having to pay water usage charges, use more water than
average domestic customers”. The first stage of the study involved analysing water
usage of HNZC and non-HNZC residential properties in the pilot study area Mangere
East. This paper will discuss the methodology adopted, the initial findings, and the
recommendations for future stages of the study.
Introduction
Public housing in New Zealand is managed by Housing New Zealand Corporation
(HNZC). Recent international studies suggest public housing tenants use more water
than private residential households because there is little incentive in conserving water
when tenants are not charged for the amount of water consumed. At present, HNZC
does not charge tenants for water use. Based on overseas experience, it is reasonable
to assume that a tenant’s water usage is higher than average. As with other public
housing providers worldwide, utility company costs constitute one of the largest
components of public housing operating cost. If the 8,900 HNZC households in
Manukau each use on average 50m3
more water per annum than non-HNZC
households, as is the case in New South Wales (NSW Government 2005), then HNZC
have the potential to save 445,000m3
of water per year, some $500,000 in water
charges.
HNZC, in collaboration with Manukau Water Limited (MWL) launched a water usage
study in early 2007, to test the hypothesis, “that HNZC tenants, in not having to pay
water usage charges, use more water than average domestic customers”. The first
stage of the study involved analysing water usage of HNZC and non-HNZC residential
properties in the pilot study area Mangere East. This paper will discuss the
methodology adopted, the initial findings, and the recommendations for future stages of
the study.

2. International Settings – Water Usage and Pricing in Public Housing
Public housing providers worldwide face the challenge of providing and maintaining
quality housing to low-income families, in a cost effective manner. Utility company
costs, including electricity, natural gas and water, constitute one of the largest
components of public housing operating costs (Fischer 2006). In the past, it was
common practice in Australia, Europe and the USA for public housing providers to
charge tenants a fixed rent, normally below 30% of the tenant’s household income, and
then supply unlimited access to utilities free of charge (Fischer 2006; The Australia
Institute of Health and Welfare 2006). There were discussions in these countries
regarding the tenants’ lack of incentives to conserve water when they were not charged
for the amount of water they consumed. A study by Victorio in 1995 even suggested
individuals tend to maximize their benefit by consuming more water (Victorio 1995).
This is supported by the findings of the New South Wales Department of Housing in
2005 that on average, public housing tenants used 50m3
more water per annum than
those renting private housing even though they had smaller household sizes. That study
also found that public housing tenants represented 8% of high water users, but only 5%
of the general population (NSW Government 2005).
In recent years, public housing providers have tended towards charging tenants for
water on a volumetric demand basis on top of the normal rent (NSW Department of
Housing 2007; State Government of Victoria Australia 2007; Fischer 2006; Chicago
Housing Authority 2005), as it is a well established water demand management practice
to use increased water rates as a mechanism for reducing water usage
(Martinez-Espineira and Nauges 2004; Rotherham 2004; Huges 2007; Victorio 1995).
For example, public housing tenants in New South Wales and Victoria, Australia, are
now paying water rates to housing departments (NSW Department of Housing 2007;
State Government of Victoria Australia 2007). In Chicago, most tenants pay utility bills
directly to the utility companies, but get partially subsidised by the housing agency in
the form of an allowance based on their property size (Chicago Housing Authority 2005;
Fischer 2006).
There are clear sustainability and environmental advantages of water conservation by
reducing water usage with the global shift to charging for water usage. The housing
departments in favour of volumetic pricing also believe they will be able to better use
the money saved on water usage to improve or acquire public housing properties, in
addition to providing better services to those in need (NSW Department of Housing
2007).

3. The Effect of Price Control on Water Demand
Most studies worldwide agree on a significant but moderate effect of price on water
consumption (Martinez-Espineira and Nauges 2004). In New Zealand, there are
consistent trends around reductions in water use with water metering and the
introduction of volume based water rates. Water consumption in Auckland City showed
a 15 per cent decrease from 220 litres per capita per day to 188 litres per capita per day
from 1997 to 2002 following Metrowater’s introduction of volumetric wastewater
charging based on water consumption (Rotherham 2004; Huges 2007). In Tauranga, the
average household water consumption in 2004 is lower than it was in 1996 despite the
rapid population rise. This is believed to be a result of water metering introduced by
Tauranga City Council in 2002 (Rotherham 2004).
The amount and rate at which water consumption is reduced by price control measures
is not straight forward to predict, as it depends on a number of factors ranging from
behavioural and housing factors to the type of water use and the overall tariff structure
(Martinez-Espineira and Nauges 2004 , Gaudin 2006). For example, water for essential
household services and those used by household appliances are generally insensitive to
changes in price. A study in Spain estimated this price insensitive water consumption
component to be a fixed quantity of 100 litres per capita per day (Martinez-Espineira
and Nauges 2004).
The effect of tariff structure on water demand is a complicated topic and will not be
discussed in detail in this paper. But generally, an increasing rate structure is more
effective in reducing water consumption than a uniform or decreasing rate structure
(Dandy, Nguyen et al. 1997).
Human behaviour such as water usage habits, moral obligations to save water, and the
perception of water price are found to have significant effects on how consumers
respond to price variations (Agthe and Billings 1996, Gaudin 2006). A study in the
USA found that water consumption dropped 30% simply by explaining price
information in the water bills to better educate consumers on prices (Gaudin 2006). At
the other end of the spectrum, a study in Europe found consumers paying a fixed water
charge tried to maximize their benefits by consuming more water (Victorio 1995).

4. HNZC and MWL Water Usage Pilot Study in Mangere East
HNZC currently manages approximately 8,900 households in Manukau City, mostly in
the suburbs of Mangere, Otara, Manurewa and Papatoetoe. The water bills in these
households are fully subsidised by HNZC; they are not reflected in rent or passed on to
public housing tenants. This provides no incentive for the tenants to conserve water,
making it difficult for HNZC to manage water demand. Therefore, HNZC and
Manukau Water Limited launched a water usage study in early 2007 to determine the
water demand profile of the HNZC managed public housing, to test the hypothesis,
“that HNZC tenants, in not having to pay water usage charges, use more water than
average domestic customers”. The first stage of the study involved analysing water
usage of HNZC and non-HNZC residential properties in the pilot study area Mangere
East.
Selection of Pilot Study Area – Mangere East
At the project scoping stage, Manukau Water Limited assessed the water bills of all the
HNZC managed households in Manukau City in the period September 2006 to
November 2006 to select a pilot study area. Mangere East has been selected to represent
the worse case scenario because the initial assessment revealed a relatively high
average water consumption rate in Mangere East compared to other suburbs. Mangere
East also has higher proportion of high water usage households, where 1.7% of
households consumed more than 8,700 litres per household per day. Ahousehold would
normally be expected to consume only 430 to 1,310 litres per household per day.
There are 1,163 HNZC households in Mangere East, representing 13% of the total
HNZC managed households in Manukau City. This is considered a representative
sample size for a pilot study.

5. Figure 1: Manukau City in Auckland

6. Figure 2: Water Usage Pilot Study Area – Mangere East

7. Methodology
The pilot study was programmed in 5 phases. Phase 1 was completed in early April
2007, and the initial results are presented in detail in subsequent sections. The project
has been progressed to Phase 3 completion to date.
Phase 1 - Per household water demand analysis;
Phase 2 - GIS data processing;
Phase 3 – Preparing per capita water demand data;
Phase 4 – Per capita water demand analysis; and
Phase 5 – Detailed investigation targeting extreme water users.
Phase 1 involved extraction of water consumption data from Manukau Water Limited’s
customer billing database and categorising the property data into five water user groups
according to their daily water consumption as follows:
Low water user - consumes less than 430 litres per household per day.
Normal water user - consumes 430 to 1,310 litres per household per day.
High water user - consumes 1,310 to 2,620 litres per household per day.
Very high water user - consumes 2,620 to 8,750 litres per household per day.
Extreme high water user - consumes over 8,750 litres per household per day.
The percentage distribution of water user groupings, average daily consumption and
maximum daily consumption for HNZC managed households were compared against
that of non-HZNC households.
Phase 2 to Phase 4 involves combining the initial results from Phase 1 with GIS
information and 2006 Census data to perform further analysis on water demand on a per
capita basis. The outcome of Phases 2 to 4 will be utilised in Phase 5 to investigate
reasons for high water usage and differences in water consumption profile, if any,
between HNZC managed households and non-HNZC households.
Figure 3 to Figure 5 summarise the procedures carried out in Phase 1 to Phase 3.

8. Figure 3: Pilot Study Phase 1 – Per Household Water Demand Analysis
Figure 4: Pilot Study Phase 2 – GIS Data Processing

9. Figure 5: Phase 3 – Preparing Per Capita Data for Further Analysis
Initial findings from per household water consumption analysis
Table 1 summarises the results from Phase 1, the per household water consumption
analysis, using data extracted in the period 1 September 2006 to 22 March 2007 from
Manukau Water Limited’s customer billing database.
Table 1: Phase 1 per household water consumption analysis results
HNZC managed households Non-HNZC households
No. of
Properties Percentage
No. of
Properties Percentage
Extreme High User 4 0.35% 1 0.03%
Very High User 39 3.36% 31 0.89%
High User 242 20.88% 294 8.44%
Normal User 770 66.44% 2208 63.39%
Low User 104 8.97% 949 27.25%
Average Daily Water
Consumption 1,200 litres per day 750 litres per day
Maximum Daily Water
Consumption 8,410 litres per day 1,440 litres per day

10. In viewing the percentage results for water user groupings, about two thirds of the
houses fall into the Normal User Group in both HNZC managed households and
non-HNZC households. However, for the remaining one third of houses, the majority of
HNZC managed households fall into higher user groups (21% High User) while those
in the non-HNZC households falls into lower user groups (27% Low User). Figure 6
and Figure 7 shows the percentage distribution of water user groupings.
Figure 6: Water User Group Distribution for HNZC Managed Households
Figure 7: Water User Group Distribution for Non-HNZC Households

11. The average per household daily water consumption for HNZC managed households is
60 % higher than that of non-HNZC households and the maximum HNZC consumption
is five times that of the non-HNZC household.
The initial findings from the per household data analysis suggest that the hypothesis of
the study is true. Since Mangere East has a relatively low socio-economic status
compared to other suburbs in Auckland, the average occupancy of the households may
be different from other suburbs. It is considered crucial to also analyse water
consumption on a per capita basis, before the testing of the study hypothesis could be
fully justified. Therefore, no conclusion has been drawn at this phase of the project. A
detailed per capita per day water consumption analysis will be conducted in Phase 4
and the potential reasons for the high or low water consumption rates will be explored
in Phase 5 in the study.
What’s next?
To refine the accuracy of data for analysis, HNZC and Manukau Water Limited may
consider modifying the methodology to use actual occupancy numbers for the HNZC
houses, extracted from HNZC databases, in place of the currently used 2006 Census
population data. Water demand profile in the pilot area may also be compared with
citywide, region-wide, and nation-wide water demand profiles to verify the findings.
If the hypothesis that HNZC tenants, in not having to pay water usage charges, use
more water than average domestic customers is proven to be true, then the next step will
be to extend the study to investigate possible benefits of using price and non-price
measures for residential water demand management in HNZC households.
Acknowledgements
The author acknowledges the support of HNZC in publishing this paper.

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