Editorial provided by Robert Glennon
Author of: Unquenchable: America’s Water Crisis and What To Do About It, and
Morris K. Udall Professor of Law and Public Policy
University of Arizona, James E. Rogers College of Law
We are spoiled in the United States. When we wake up in the morning and turn on the tap, out comes as much water as we want for less than we pay for cell phone service or cable television. Many U.S. cities have archaic, flat-rate prices that charge all users the same regardless of the amount of water used. Just as bizarre
is the fact that some cities employ decreasing
block rates, so that the more water you use, the
less you pay for that final block of water. We
should use increasing block rates to encourage
water conservation, and we should factor in a
seasonal water use component as well. After all,
basic water use does not go up in the summer.
Increased water consumption is due to discretionary
uses, such as filling swimming pools and
watering lush landscaping.
It would surprise most Americans to find out
that the water bill they pay, to a local municipal
water department or a private water company,
does not include a commodity charge for water.
Although this sounds counter-intuitive, the
rates are based on a “cost of service” principle.
Water rates are designed to generate sufficient
revenue for the department or utility to offset
the costs of the infrastructure, treatment and
We should also decouple the cost of service
structure from the revenue stream to the water
department or utility. This is a new concept
in water rates, but it makes tremendous sense.
Consider the recent plight of a few specific
In Phoenix, the economic downturn has yielded
a large number of foreclosed homes and commercial
buildings. In Milwaukee, Wisconsin, the
flight of water-intensive companies from Milwaukee
to other parts of the United States has
meant that Milwaukee Water Works is delivering
substantially less water than it did thirty years
ago. In some Southern California cities, the
recent drought has prompted aggressive water
conservation campaigns. Citizens have responded
by reducing their water consumption.
In these three examples, the water utility suffered
a decline in revenues. And, because rates
are based on the cost of service, the revenue
stream was insufficient to cover the utilities’
costs. In response, the mayor and council or the
state public utility commission approved water
rate increases to recapture the lost revenue.
Talk about a kick in the pants. Citizens conserve water and
get rewarded with a water rate increase!
The water industry could learn a lesson
from the natural gas and electric industries
that have moved in recent years toward
decoupling the revenue stream from
the quantity of the product delivered. We
should reward water departments and
utilities with an increase in the revenues
or profits if they achieve certain demonstrated
benchmarks, such as reducing the
average per person per day consumption
water rates in their delivery area.
There is much that we can do to harmonize
the cost of water with its inherent
value. But we have thus far one precious
little about it. Now it’s time to change.
For more information on Robert Glennon, consider visiting the following resources:
This article is one of a regular series of reports
on emerging and innovative technologies and
policies in the area of environment and water
resources produced by EWRI’s Emerging and
Innovative Technologies Committee (EITC). If
you are interested in contributing an article please
contact Sean McKenna (firstname.lastname@example.org).
For information on becoming a member of this
Committee, please contact Laurel Saito (lsaito@