Are water rates becoming unaffordable?

Abstract

The problem of affordability of drinking water is not limited to customers of small or rural water systems.National trends in water rates and income levels are examined to determine whether water rates are becoming unaffordable. A more detailed analysis of water rates and income distributions is conducted for 168 water suppliers in Pennsylvania. The author concludes that rates are increasing much more rapidly than income levels for low‐income water customers. Further, the ability of customers to afford water service appears most at risk in large water systems, even though those systems tend to be publicly owned and have lower rates than investor‐owned systems. Overall, anywhere from one in four to one in six water customers is currently paying more than 2 percent of household income for water service. Expected rate increases will place increased pressure on water utilities and all levels of government to develop policies and rate structures to ensure the continued provision of water service to low‐income households.