Saturday, 26 January 2008

Stop flushing your dollars down the toilet: The economics of a high-efficiency toilet set

There are so many ways to save money around your own house. One of such ways is cutting on water consumption and thus reducing your water and wastewater bill. One may argue that it is not much money, but let's look at some simple math before making such conclusions. I will use my family as an example.

I own a house and have three persons in my household, the two of whom are (honestly) not true frugal types. Our average bi-monthly water consumption is around 35 cubic metres (over 9,200 gallons). In my minicipality, which is a part of the Greater Toronto Area in Ontario, the user fee rates for water consumption are C$0.885 per m3 for water and C$0.84 per m3 for wastewater, which amounts to the total of C$1.725 per m3. So for us the average bi-monthly bill for water and wastewater is a hefty C$60.38, which sums up to the annual total of $362. This is something material, so naturally the household's frugal person (me :-)) looks for different ways to reduce this bill as much as possible and use the resulting savings on something else (like investing in good dividend stocks). This post is about reducing one peculiar but virtually unavoidable type of water consumption - it is about saving money which is literally being flushed down the toilets every day in every house.

Back to math: We have three toilet sets around the house and all of them are pretty old models with traditional valve systems and ridiculously low-efficient, large, 15-litre-per-flush water tanks. I adjusted them as much as I could to prevent all 15 litres from being wasted in each flush, but with only a minor success, maybe reducing each flush to 13 litres. Going further down is not really possible since the flush system would not work properly. I actually broke the flushing system in one of our old toilets when I was trying to prevent water from dripping down through an old rubber plug. That was the last drop. After some minor preliminary research, today I shopped (with success!) for a high-efficiency toilet set to replace the broken toilet.

At the end of the day, a high-efficiency-consumption two-piece model with a dual-flush system from a well-recognized brand cost me C$235 at Home Depot. The price included a $19 toilet installation kit, which I bought separately, and a 13% sales tax. A dual-flush system means that you can flush either 3 or 6 litres (0.8 or 1.6 gallons per flush), depending on which of the two shiny flush buttons you press. In terms of its capacity, the model ranks very well and is said to remove 900 g of solid waste per flush. None of us is that "productive" any way, so I adjusted the size of flushes even further down, which was done through an easy-to-use valve adjustment mechanism in a water tank.

Now, let's look at the math of future savings from installing this new toilet: In my calculations, I assume that each person on average does at least five flushes a day. So we spend 15 flushes times 13 litres = 195 litres per day when using old toilets. That's 5,850 litres (5.85 m3) a month, or 70,200 litres (approximately 70 m3) a year. I would also take into account those minor but persistent leaks that happen through old rubber flush plugs, which amounts to, say, extra 3-5% of regular 70K litres and effectively increases the total toilet-flushed water consumption to 72-73 m3 a year. In terms of money, this is roughly C$125 a year, or almost 34.5% of our annual water consumption charges.

The toilet that I replaced is used most often, so let's say it accounts for 50% of our total toilet water use and therefore costs C$62 per year in water-usage costs. Reducing the size of flushes from 13 to an average of 4 litres (the weighted average of 3 and 6 litre flushes further manually adjusted down through a valve adjustment mechanism) cuts the water consumption by 70%, which is equal to C$43 in direct money savings.

The total investment cost of C$235 and the C$43 annual savings give us the breakeven period of 5.5 years and the 18.3% annual return on investment. If you take into account the fact that municipalities generously hike their user-fees well ahead of inflation, the breakeven number will be even smaller and the ROI rate will be growing each year. Say, if the rates on water and wastewater use increase by a conservative 3% a year, then the breakeven period decreases to 5.1 years, and the annual ROI grows annually at 3%. Not bad for a simple investment.

Now, if I lived in the City of Toronto, I would receive the C$75 water-savings rebate available on the model that I purchased, which would cut the cost of investment to C$160 dollars, reduce the fee-growth-adjusted breakeven period to only 3.6 years, and give me the 27% first-year ROI rate growing annually along with user-fees on water consumption! I know that other municipalities in Canada and the States have similar water-saving rebate programs.

If you are planning to live in a house for a while, it looks like a very good investment, with or even without a government rebate. In addition, if you decide to sell your house, then the brand-new, great-looking, and high-efficiency toilets with dual-flush fancy buttons will be one of the marketing highlights that will add value to your house and will help sell it for a higher price much faster. When you are summing up total benefits from installing a low-flow toilet model, you can also take into account some significant personal satisfaction from using a new toilet which does not make dripping and leaking sounds at night and which does not flush a ton of water every time when you take a small pee. Last but not least, you help conserving the environment.

P.S.: I am planning to replace the other two toilet sets in my house during 2008.

This post participated in the Carnival of Personal Finance #137 hosted by the Dividend Guy.


Anonymous said...

Great article. I am in the city of Guelph and going through the math. Although the savings are not tremendous consider two things. First, the cost of water will go up in the future. Second, the sheer amount of water a toliet uses on an annual basis is incredible. For 15 flushes a day on a 15L/pfl you come very close on annual basis to what an average swimming pool requires.

BEIT said...

Thanks. The toilet works great, by the way. It has a strong flushing system, which uses the absolute minimum of water. Do-it-yourself installation was easy too, taking up only a couple of hours and saving me probably at least a $100.