The Troubling Paradox Facing Water Utilities: Conserving Water While Driving Up Rates
A growing operational headache is brewing in the Western U.S.: successful water conservation is putting utility revenues and climate resilience on a collision course. A new Stanford study models this dynamic in Santa Cruz, California.
The research, led by PhD student Jennifer Skerker and assistant professor Sarah Fletcher, is “the first to comprehensively model” the intersection of climate change, infrastructure investment, and water affordability.
Using Santa Cruz as their blueprint, researchers explored the troubling reality facing local utilities: invest in climate-resilient infrastructure, such as desalination plants and potable reuse, but consequently double the median water bills by mid-century.
“Ensuring reliable water access for everyone is going to require interventions at the state and federal level that go far beyond what individual utilities can do on their own,” said Fletcher.
While federal programs like WIFIA and State Revolving Funds (SRFs) are available for utilities, financing alone isn’t a fix for the strain on households. These programs can help to fund major projects, but they don’t address the financial burden that forces utilities to recover costs from customers.
For that reason, the authors of the study emphasize the need for federal water assistance programs to fill the gap. In 2024, the U.S. EPA released the Water Affordability Needs Assessment, which was created with the input of local utilities, and encouraged the establishment of a permanent federal water assistance program, similar to the one created during the COVID-19 pandemic.
Until federal policy pairs infrastructure loans with permanent low-income assistance, utilities will remain stuck balancing necessary infrastructure upgrades and the limits of local ratepayer tolerance.