Assessing Water Affordability

A new pilot study in California shows many households, even within affluent communities, routinely spend over the affordability threshold of 2 percent of their household income on their water bill. The number of water systems with “unaffordable” rates varies by region and measure used – which has important implications for policy makers.

Assessing Water Affordability: A Pilot Study in Two Regions of California, from the Pacific Institute in partnership with Community Water Center and Fresno State University, looks at both an urban and rural case: the Sacramento metropolitan area and the Tulare Lake Basin. In Sacramento, using the most common form of determining affordability – the annual water bill as a percent of median household income at the water system scale – few water systems appeared to suffer from unaffordable rates. In contrast, in the Tulare Lake Basin, 18 percent of systems had unaffordable rates. Using a more fine-grained measure based on household income levels reveals even higher levels of unaffordability in both regions.

In the Sacramento metropolitan region, measuring on a water-system-wide scale vs. a household scale means the difference between recognizing zero water systems with unaffordable rates vs. 100,000 households with unaffordable water rates. In the rural Tulare Lake Basin, measuring on these different scales means finding only nine out of 51 water systems with unaffordable rates vs. nearly 4000 households with unaffordable water rates – some 40% of the households in the study group.

“Water rate affordability is a central element to water access, and cost makes water excludable and inaccessible to those who cannot afford it,” said Dr. Juliet Christian-Smith of the Pacific Institute. “Water affordability is also a major concern to public welfare, safety, and security. When households are unable to make their water payments, consequences can include public health crises, social unrest, and lost revenue for water providers that can threaten their fiscal stability.”

The study’s results show that a significant number of areas within water systems have unaffordable rates, even if the system as a whole does not, and so it may be more important to consider household income rather than median income when assessing and addressing water affordability.