What is the ROI of Water Efficiency?

What’s the ROI of water efficiency? Most of us take for granted that we can turn on a spigot and get fresh, hot or cold water anytime we want… Or, for that matter, that we can go into a little room and use a miracle device called a “toilet” that flushes away all our immediate problems.

As fresh water becomes more expensive, and since toilet flushing is the biggest source of water use1 in both residential and commercial buildings in the United States, it begs the question… What is the ROI of water efficiency from toilet replacement?

Half of all commercial buildings in the U.S. were constructed prior to 1980.
Half of all commercial buildings in the U.S. were constructed prior to 1980.

Not only is the price of water in the U.S. rising steadily, but the majority of the 5 million commercial buildings and 135 million residential homes in the U.S. were constructed prior to 1980, meaning they likely include toilets that use 3-5 gallons of water per flush, or even up to 6 gallons per flush. When combined with sewer charges, which can more than double the total cost of water consumption, the cost of water in each inefficient flush sends real money down the drain.

In this article we will examine the return on investment (ROI) you could expect from replacing older, inefficient model toilets with newer low-flow, high-efficiency or retrofit models and what affects the cost of your water bill in municipal water and sewer charges. We will calculate the simple payback and ROI over the expected useful life of the following new toilet and/or retrofit types:

EPACT Efficiency Law of 1992

Toilet efficiency started improving in 1992, when the 41st President of the United States, George H. W. Bush2, signed the Energy Policy Act into law making 1.6 gallons per flush the mandatory federal maximum for new toilets. The law went into effect in January 1, 1994 for residential buildings and January 1, 1997 for commercial buildings.3

Today indoor water fixture efficiency is measured against a “Baseline” determined by the Energy Policy Act, the Uniform Plumbing Code and the International Plumbing Code. The code baseline and goals for efficient water consumption are as follows:

Table of Bathroom Fixtures with Baseline Water Use, Water Efficiency Goal and % Improvement over Baseline.

The table above is used to calculate water efficiency improvements in green buildings, such as LEED certified buildings, by comparing the fixture type, baseline water use, water efficiency (WE) goal, and percentage improvement beyond that goal.

In this article, when determining the return on investment (ROI) from toilet replacement we will use a simple payback calculation that considers4:

  • Total cost of water used per year by existing (inefficient) toilet in water and sewer charges.
  • Cost of investing in a new efficient toilet.
  • Gallons of water saved per year from new toilet.
  • Cost of the savings in water and sewer charges.
  • Estimated useful life of the new toilet or water conservation measure.

What is the Cost of 1,000 Gallons of Water in the U.S?

As you can see from the Circle of Blue chart below, the cost of water varies significantly from state to state and by local municipality. Your residential and/or commercial water bills are calculated in increments of 1,000 gallons of water consumed, or per 1,000 cubic feet of water consumed. But each state or local municipality charges their users differently for water.

For instance, if you live in Chicago, you are charged $29.04 per 1,000 cubic feet of water or approximately $3.88 per 1,000 gallons of water, as of June 1st, 2017. If you live in Boston, you are charged an escalating rate based on usage per 1,000 cubic feet/1,000 gallons that starts at $49.36 per 1,000 cubic feet and $6.59 per 1,000 gallons of water.

Household Cost of Water per Month by U.S. State.

 

However, don’t forget that you are ALSO charged a price for sewer charges that reflects the volume of water that you send back to your local treatment facility for processing.

For instance, in Chicago, your sewer rate is equal to 100% of your water rate. So, if you live in Chicago, you will pay a monthly bill that is double your consumption rate. However, in Boston your sewer rate is significantly higher than your water rate and, again, escalates based on usage starting at $69.43 per 1,000 cubic feet or $9.28 per 1,000 gallons of water.

PBS Newshour reports that in 2017 the average U.S. household pays $120 per month for water and that this cost may rise by 40% in the next five years. However, as mentioned above, the city rates for water and sewer are much higher.

In major U.S. cities, water prices have been increasing steadily since 2010, with cities like Chicago and San Francisco seeing annual rate hikes as high as 15 percent. Indeed, a 2015 survey by Michigan State University of 30 major U.S. cities found that water bills rose by 41 percent between 2010 and 2015. This dilemma is well-documented in Detroit, where 50,000 households have lost water access since 2014, or in Philadelphia, where 40 percent of the city’s 227,000 water bills are past due.

The priciest cities for water in the U.S. are Atlanta, GA and Seattle, WA. Boston, MA, New York, NY, Houston, TX are relatively high, but much less expensive than Atlanta or Seattle. Surprisingly, Fresno, CA is listed as the cheapest in the chart. The numbers in the chart above are from 2015, and are probably LOW.

For instance, Circle of Blue calculates the 2015 cost of water for a family of four in Boston using 100 gallons of water per person, per day, or 400 gallons per day, at $186 per month.

However, Boston’s Water and Sewer Commission lists their 2017 water and sewer rates at $89.32 per month for 180 gallons of water per day. To compare apples to apples, we know that 180 gallons is 45% of 400 gallons. Using today’s water and sewer rates in Boston, we calculate that the monthly cost for a family of four using 100 gallons of water per person per day in 2017 is approximately $198.50 per month. The increase from $186.00 to $198.50 per month in Boston is almost a 7% increase in only two years…!

How are Water and Sewer Rates Calculated?

Water bills are comprised of water and sewer charges.

Pricing strategies for water and sewer vary from state to state and range from fixed monthly pricing, variable based on consumption, location, type of account, etc.

Generally, though, your water and sewer charges reflect the costs that agencies in your state or municipality incur for their overall capital investments, repairs and operating costs in delivering and treating the water that you use.

Your water charges reflect the overall water consumed for all of our commercial and residential water uses including drinking, toilet flushing, hand washing, showering, cooling towers, landscape irrigation, etc. and sewer charges reflect the water that flows back out through drains, toilets, etc. that is then processed by our local water treatment facilities.

Much of our water and sewer infrastructure is over 100 years old. Estimates are that the costs of upgrading water and sewer infrastructure in the U.S. over the next 25 years are greater than $1 trillion.

Simple Payback and ROI of Water Efficiency and Toilet Replacement

If your home or building was constructed prior to 1990, its toilets may be using 3-5 gallons of water per flush, or even up to 6 gallons per flush. This is 5x more water than needed to do the job using today’s toilet technology.

As you will see below, residential homeowners who plan to stay put and commercial building owners with a “buy and hold” strategy should absolutely replace their inefficient toilets.

A simple payback calculation delivers the amount of time in months or years it will take to earn back your initial investment on replacing a new toilet. The ROI calculations consider the potential return on the up front investment over the useful life of the investment.

In calculating the simple payback for a toilet replacement, the price of the toilet matters as much as the cost of water. A more efficient but expensive “fancy” toilet will negatively impact your simple payback and your ROI.

Prices for efficient toilets at Home Depot vary from $88-309 on up, not including installation. Popular toilet manufacturers include Kohler, TOTO, American Standard and Home Depot’s own Glacier Bay brand… Each company offers 1.0-1.28 or the standard 1.6 gpf options, as well as dual flush or single flush models. Commercial buildings may also save money by retrofitting existing toilets with high-efficiency dual-flush valves.

We will calculate the simple payback for the following new toilet and/or retrofit types:

  • Residential single flush
  • Commercial single flush
  • Commercial dual flush
  • Cheapskate “brick” retrofit
  • Commercial “Uppercut” valve retrofit

In our examples below we use the water and sewer rates from Boston, MA. Why Boston? Because it’s water/sewer rates are quite high (but not the highest) and because I live in New England… But you can use any city.5 The calculations are here. Our assumptions6 are:

  • Water $$ per 1,000 gallons: $6.60
  • Sewer $$ per 1,000 gallons: $9.28
  • Total cost per 1,000 gallons of water and sewer: $15.88
  • Cost of toilets purchased from Home Depot (listed in spreadsheet)
  • FTE counts described below
  • ROI assumes estimated useful life of water conservation measure (see in spreadsheet).

Residential Single Flush Example

Link to Toilet ROI Spreadsheet.
ROI calculations.

Home Depot offers a two piece Glacier Bay 1.28 gallon per flush low flow toilet for $88.00. To calculate the potential cost savings, we’ll use this model (1.28 gpf) and assume that the toilet being replaced is an older model with 3 gpf.

Our residential example will assume a household with four (4) people, who each use the bathroom an average of 4 times per day. We will assume one single flush toilet and that it is used 365 days per year.

With the inefficient toilet at 3 gallons per flush, each individual in the home uses 4,380 gallons of water per year. At $15.88/1,000 gallons of water, this is a cost of $69.56 per resident per year, or $278.25 total per year for the household.

By replacing the 3 gpf toilet with a 1.28 gallon per flush toilet, the home would reduce its gallons of water used per year by over 50%, from 17,520 gallons per year to 7,475 gallons per year. The dollar savings with the 1.28 gallon per flush toilets is equal to $159.54 per year, resulting in a simple payback of 0.55 years to replace the inefficient 3 gallon per flush toilet.

Simple Payback: 0.55 years

ROI after 20 years: 3,625%

Commercial Single Flush Example

According to the AWWA Research Foundation report on residential water usage, the average person flushes the toilet 5.05 times per day, or 1843 times per year. To calculate bathroom water efficiency in an office environment, the U.S. Green Building Council assumes 3 toilet flushes per FTE per day for both women and men.

OSHA required minimum number of water closets per employee
OSHA required minimum number of water closets per number of employees.

The U.S. Federal Government’s Governmental Accountability Office (GAO) defines a full time office worker, or Full Time Equivalent (“FTE”)7, as an employee who works 40 hours per week, 5 days per week, 52 weeks per year for a total of 260 work days.

The Occupational Safety and Health Administration (OSHA) requires one toilet per up to 15 building occupants. For our example, we will use 15 building occupants and assume a 50:50 male/female ratio in the building, so we have two separate bathrooms, each with one inefficient single flush toilet that will be replaced with our 1.28 gpf model.

We will assume that all toilets in this example are single flush (not dual flush) and that there are no urinals for the male occupants.

In a building with 15 FTEs, the old toilets are flushed 3 times per day per FTE, 260 days per year using three (3) gallons of water per flush (gpf) resulting in 11,700 flushes per year, and 35,100 gallons of water per year. Using the inefficient toilets, each FTE uses 2,340 gallons of water per year. At $15.88/1,000 gallons of water, this is a cost of $37.16 per FTE per year. A building using 3 gallon per flush toilets with 15 FTEs would cost a total of $557.39 per year.

By replacing the 3 gpf toilets with 1.28 gallon per flush toilets, the building would reduce its gallons of water used per year by over 50%, from 35,100 gallons per year to 14,976 gallons per year. The dollar savings with the 1.28 gallon per flush toilets is equal to $319.57 per year, resulting in a simple payback of 1.53 years for replacing two inefficient commercial toilets.

Simple payback: 1.53 years

ROI after 20 years: 1,304%

Commercial Dual-Flush Example

What happens when we replace the inefficient 3 gallon per flush toilets with efficient 1.1/1.6 gpf equipped dual-flush toilets?

Prices for dual-flush toilets vary dramatically from $159 on up. At the low end of the price spectrum, the Glacier Bay model N2420 dual flush toilet retails for $159.00 at Home Depot.

Assuming everything else in our above example remains unchanged (15 FTEs, 50:50 male/female ratio, 2 inefficient toilets replaced, 3 flushes per day, 260 days per year, no urinals available for male occupants, etc.)…

Again, the old toilets are flushed 3 times per day per FTE, 260 days per year using three (3) gallons of water per flush (gpf) resulting in 11,700 flushes per year, and 35,100 gallons of water per year.

Each FTE uses 2,340 gallons of water per year. At $15.88/1,000 gallons of water, this is a cost of $37.16 per FTE per year. A building using 3 gallon per flush toilets with 15 FTEs would cost a total of $557.39 per year.

For dual flush calculations, the U.S. Green Building Council assumes a ratio of 2:1, half flush/full flush, respectively, for FTE bathroom trips in a building using dual flush toilets.

The simple payback result is approximately 1 year using dual flush toilets, slightly better than our earlier single flush example.

By replacing the 3 gpf toilets with 1.1/1.6 gallon per flush toilets, the building would reduce its gallons of water used per year by over 60%, from 35,100 gallons per year to 14818.5 gallons per year. The dollar savings with the 1.1/1.6 gallon dual-flush toilets is equal to $322.07 per year, resulting in a simple payback of 1 year for replacing two inefficient commercial toilets.

Simple payback: 1 year

ROI after 20 years: 2,025%

Toilet Retrofit Examples

If you have older model toilets in your home or building, you can improve their efficiency at little or no cost by displacing water in the toilet tank, thereby reducing the total amount of water used per flush.

Commercial retrofit kits, such as the Uppercut from Sloan (described below), are available that can replace older, less efficient commercial toilet valves from Sloan and other “flushometer” manufacturers. However, if you want the ultimate inexpensive retrofit, you can displace water in old toilets that use tanks by using some bricks or a 2 liter bottle filled with sand.

Sloan Uppercut Retrofit

The Sloan Retrofit kit is available for around $51.26 and can update an inefficient commercial toilet into a dual flush toilet using 1.6 or 1.1 gallons of water per flush.

Assuming everything else in our above examples remain unchanged (15 FTEs, 50:50 male/female ratio, 2 inefficient toilets replaced, 3 flushes per day, 260 days per year, no urinals available for male occupants, etc.)…

Again, the old toilets are flushed 3 times per day per FTE, 260 days per year using three (3) gallons of water per flush (gpf) resulting in 11,700 flushes per year, and 35,100 gallons of water per year.

Each FTE uses 2,340 gallons of water per year. At $15.88/1,000 gallons of water, this is a cost of $37.16 per FTE per year. A building using 3 gallon per flush toilets with 15 FTEs would cost a total of $557.39 per year.

For dual flush calculations, the U.S. Green Building Council assumes a ratio of 2:1, half flush/full flush, respectively, for FTE bathroom trips in a building using dual flush toilets.

The simple payback result is 0.32 years using a Sloan Uppercut retrofit kit.

By retrofitting the 3 gpf toilets with 1.1/1.6 gallon per gallon Sloan Uppercut kits, the building would reduce its gallons of water used per year by over 60%, from 35,100 gallons per year to 14,818.5 gallons per year. The dollar savings with the 1.1/1.6 gallon dual-flush toilets is equal to $322.07 per year, resulting in a simple payback of 0.32 years for replacing two inefficient commercial toilets with dual flush Sloan Uppercut kits.

Simple payback: 0.32 years

ROI after 10 years: 3,141%

Cheapskate Toilet Retrofit

If your toilets have tanks, a simple hack to reduce water usage from toilet flushing is to place a 2 liter plastic water bottle filled with sand or pebbles, or a couple of bricks sealed in a Ziploc bag, in your toilet tank. Either method will displace approximately 1/2 gallon of water. The volume of a brick is .27 gallons (2 x .27 = .54 gallons) and a 2 liter bottle is equal to .5283 gallons.

This won’t bring your toilets to the 1.6 gallons per flush required with code, but it’s not bad. Assuming a cost of $1.00 per hack, the simple payback calculation on the cheapskate method yields a breakeven in our example of about 8 days using a home in Boston with four residents and one toilet.

However, if you are searching for more permanent water saving options, as mentioned above, smart sensor appliances, water efficient toilets, waterless urinals and low-flow faucets that use 20-50% less potable water than code required levels are widely available.

Simple payback: 8 days

ROI after 10 years: 46,449%! 

Should I Buy a New Toilet?

So… if I’m using an inefficient toilet, should I buy a new low-flow or high-efficiency model? And how long will my new toilet last? Will the toilet pay for itself during its lifetime?

An well-made toilet can last up to 30 years without being replaced. However, we’ve assumed slightly more conservative estimated useful lives (EUL) of our water conservation measures. This means that in all of these cases, the new toilet would generate cost savings well beyond the initial payback period.

However, if your old toilets use tanks and still have a few years left before needing to be replaced, it might be smartest to look into cheaper options than replacing the toilet, such as the “cheapskate” option described above.

Ultimately, each year brings advances in water and energy efficiency technologies and any time something is being consumed, we can calculate a payback period.

When looking for new toilets and fixtures, you should shop for WaterSense labeled products which are limited to 1.6 gallons per flush maximum. WaterSense fixtures that go beyond the baseline efficiency levels, such as dual flush toilets, composting toilets and waterless urinals, can save a tremendous amount of potable water.

Fixtures that are labeled WaterSense are verified by third-party testing and certification as meeting EPA specifications for water efficiency and performance. WaterSense labeled products include, but are not limited to, toilets, sink faucets, urinals, showerheads and irrigation controllers.

Footnotes

  1. The general consensus is that lavatories are the greatest source of water consumption in residential buildings and most office buildings. A commercial building water calculator is available here. Cooling towers are the second greatest consumers of water in commercial buildings. However, the amount of water used by a specific process varies greatly by the type of building and/or type of tenant. The Pacific Institute offers a great breakdown of water use in commercial buildings by building type and use type, such as hotels, restaurants, hospitals, office buildings, etc.
  2. Yes, there was a time when the Republican party was leading in energy and water efficiency!
  3. Low flow toilets are defined as having a flush rate of 1.6 gallons per flush or less, whereas “high efficiency toilets” are defined by a flush rate of 1.28 gallons per flush or less.
  4. We do not factor in stormwater charges in water consumption in these calculations.
  5. If you’d like me to send you a copy of the spreadsheet so that you can customize the calculations and make your own assumptions, just email me and I’ll send you an version in Excel.
  6. ROI assumptions are conservative because they assume that the cost of water will remain flat for life of the water conservation measure (i.e. no increase in the cost of water going forward).
  7. FTE is short for “full time equivalent” and is a proxy for the number of hours worked by one employee on a full-time basis. On an annual basis, an FTE is considered to be 2,080 hours, which is calculated as: 8 hours per day * 5 work days per week * 52 weeks per year = 2,080 hours per year. Part time workers are usually considered to be ½ FTE. However, the 2,080 does not include any deductions for holidays, vacation time or sick time and therefore using a lower number of 2.5 may be more realistic for our office building example.