New Mexico Community Turns Water Loss into Revenue Recovery
As shrinking aquifers force difficult choices between growth and conservation in the American Southwest, one historic mining town in New Mexico found a way to transform a pending water crisis into a conservation success story. Silver City's journey demonstrates how innovative financing can turn urgent infrastructure needs into revenue-generating solutions—without raising rates or burdening taxpayers.
A Smart Plan in Need of Funding
Nestled at 6,000 feet above sea level, Silver City is home to Western New Mexico University, a vibrant arts community, and approximately 10,000 residents. The town’s rich heritage, picturesque downtown, and recreational opportunities also regularly draw tourists to the area. However, leaders of this thriving community faced a potential crisis: ensuring adequate water supplies for current residents, businesses, and nearby mining operations.
The stakes couldn’t be higher. The Mimbres Basin, a source for Silver City’s groundwater, has been declining for decades, even as groundwater diversions have steadily grown. Drought, severe heat, and irregular rainfall patterns put additional pressure on an already strained resource.
Recognizing they had few options for generating new water, Silver City's leaders took action. The town established a comprehensive Water Conservation Plan designed to reduce waste, minimize outdoor water use, incentivize conservation behavior, and increase transparency around water usage to the community.Â
The plan was grounded in rigorous analysis. A top-down evaluation of the water system, conducted according to American Water Works Association’s (AWWA) best practices, revealed the aging meter infrastructure was failing the community. The audit determined that replacing outdated meters with smart technology that offers real-time leak detection and improved accuracy should be the first priority.
The challenge was funding the upgrade without adding debt or raising rates—a common dilemma facing municipalities throughout the region.
Innovative Financing Strategies
After two years, community leaders identified an innovative funding solution: energy performance contracting. This financing mechanism would allow the town to use future revenue streams and operational savings to fund the new metering system. The solution provided a path forward that aligned with the conservation plan’s goals.
Silver City partnered with Energy Systems Group (formerly Yearout Energy) to advance this critical initiative. Before proposing a solution, ESG's engineering team conducted a comprehensive investment-grade audit. The audit analyzed factors such as water balance, baseline utility data, existing meter accuracy, and revenue projections.
The findings were striking: Silver City was losing approximately 18.2% of its water to leaks and waste. In addition, inaccurate meters contributed to revenue loss for the town. With this data in hand, ESG worked with municipal leaders to select the optimal equipment and technology and to develop a clear scope of work with guaranteed maximum pricing.
Transforming Operations, Recovering Resources
Energy Systems Group oversaw the complete meter replacement program, which allowed community staff to stay focused on daily operations. The comprehensive implementation replaced 6,500 existing meters with smart meters featuring steady-state automatic meter reading technology and real-time leak detection capabilities.
The transformation delivered immediate, measurable results:
- Increased Revenue. Meter accuracy jumped from 93.7% to 98.5%, recovering $245,000 annually in revenue.
- Water Recovery: The project has reclaimed 30 million gallons annually by enabling utility staff to rapidly identify and address leaking or broken infrastructure.
- Operational Efficiency: The elimination of manual meter readings has freed up staff to focus on higher-priority infrastructure needs, while improved water conservation has reduced wear on pumping systems.
The $3.74 million project carries a payback period of just over 14 years, with all savings applied directly toward debt service to maintain the town's budget-neutral commitment.
A Solution for Water Conservation
Silver City's success demonstrates how forward-thinking communities can address infrastructure challenges without shifting costs to residents. The project proves that aging infrastructure doesn't have to be a financial burden when innovative financing meets smart technology.
As water scarcity intensifies throughout the western states, Silver City's model offers a proven path forward. The town's partnership with Energy Systems Group shows that municipalities can achieve their conservation goals, improve their bottom line, and prepare for future growth—all while maintaining fiscal responsibility that serves both current residents and generations to come.
