In a series of briefs, the Bipartisan Policy Center’s Water Task Force is exploring some of the unique challenges and opportunities facing our nation’s water and wastewater sectors. This paper dives into one of the most vexing problems for water systems in the United States: how to price water services to fully cover costs and maintain affordability for customers who already struggle to pay their bills.
From a policy perspective, there are four main points to recognize:
- The magnitude of investments needed to address aging infrastructure, changing customer bases, regulatory compliance, and climate change requires higher rates. Related to this, conservation efforts have led to water use declines, which can push utilities to further compensate for lost revenue.
- Because every human being needs safe, clean water and sanitation, safeguarding affordability and access for vulnerable households amid these rising costs must be a national priority.
- Many water systems are fundamentally ill-equipped to respond to cost pressures and address affordability concerns, lacking effective asset management and sustainable business models.
- In strategically responding to these challenges, partnerships with the private sector—a potentially cost-effective but underutilized tool in the water industry—offer a promising opportunity to modernize infrastructure and optimize service.
This brief reviews these issues and offers policy options to ensure that disadvantaged communities have equitable access to critical water services. This aim must be part of a broader effort to more effectively price water services and manage water systems across the country. Without tackling these first-order challenges, many water systems will continue to operate unsustainably and insufficiently maintain their assets, leading to waste, inadequate service, and higher prices.