What Water Utilities Need To Know About The Challenges Of Water Affordability
By Christian Bonawandt
A report from the U.S. EPA last month reveals the severity of water affordability challenges in the United States. Released to Congress on Dec. 17, “Water Affordability Needs Assessment” estimates that between 12.1 million and 19.2 million households — or between 9.2% to 14.6% of total U.S. households — lack access to affordable water services. The cost of these unaffordable water service bills is approximately $5.1 billion to $8.8 billion nationwide. The report outlines the causes, impact, and possible solutions for America’s water affordability problems.
How Is Water Affordability Measured?
While there is no single approach to defining and measuring water affordability, the report leverages a mix of both quantitative and qualitative factors. In particular, the 2024 Water Affordability Needs Assessment focuses on household-level affordability using the Interagency Drinking Water System (IDWS) metric. They determined this approach was most suitable for meeting the Infrastructure Investment and Jobs Act of 2021 (IIJA) requirements of examining the prevalence of households lacking affordable water access and utilities serving a disproportionate percentage of households in need.
To determine the number of households experiencing a high water burden, the EPA used two affordability threshold values: 3% of household income spent on water bills and 4.5% of household income spent on water bills. These thresholds align with other affordability metrics used for other essential services, such as electricity, ensuring a consistent evaluation of household expenses.
Causes Of Water Affordability
The cost of water services has increased significantly over the years in the U.S. One major cause has been the need for substantial investments in maintenance and upgrades of existing, aging water infrastructure, which often leads to higher rates for customers. In addition, the way utilities implement rate increases and the structure of water rates can significantly impact affordability. Fixed service charges, in particular, can disproportionately burden low-income households. Moreover, water affordability challenges have increased as income distribution becomes more unequal, leaving low-income households struggling to keep up with rising water costs.
Impacts Of Water Affordability
The lack of affordable access to water services poses significant challenges for both households and utilities. These challenges actually exacerbate one another, creating a cycle that can be difficult to break.
For example, when water bills become unaffordable, households may be forced to cut back on other essential expenses like food, healthcare, and education or work longer hours to meet their basic needs. This can lead to a decline in overall well-being and increased economic stress. The inability to pay for water services can also result in service disconnections, leading to a reliance on unsafe water sources or a lack of proper sanitation. This poses serious public health risks, potentially leading to the spread of diseases and hygiene-related issues.
In the most extreme cases, unpaid water bills can result in tax liens or even the loss of one's home. This further destabilizes families and communities, deepening the cycle of poverty. Water insecurity can also contribute to psychological and social distress. Worry about water bills, the shame associated with service loss, and the potential for housing instability can lead to increased anxiety and depression, impacting individuals and families on a personal level.
For utilities, the more households that struggle to pay their bills, the more likely they will experience revenue shortfalls. This can impact the ability to cover operating costs, maintain critical infrastructure, and make necessary investments in system upgrades and expansions. As a result, utilities may be forced to defer maintenance and repairs, which can lead to a deterioration of water quality, increased system failures, and higher costs in the long run.
At the same time, as unpaid bills pile up, it can negatively impact a utility’s bond rating. This can make it difficult to secure financing for infrastructure projects, and hinder the ability to plan for the future.
Altogether, utilities are often caught between the need to raise rates to cover rising costs and the recognition that doing so will exacerbate affordability challenges for many households. This creates a difficult balancing act as they try to maintain both financial viability and equitable access to water.
How To Address Water Affordability
The EPA report recommends a multifaceted approach to address water affordability. This includes a long-term federal assistance program to provide financial relief for households struggling to pay their water bills. It should also and help utilities maintain financial stability and make needed infrastructure improvements. Further, efforts need to be taken to educate the public and policymakers about water affordability challenges and potential solutions are needed to build support for effective policies and programs. By investing in water infrastructure improvements, the federal government can help reduce costs in the long term by increasing efficiency and reducing the need for costly repairs. Lastly, alleviating water affordability issues requires a collaborative effort involving all levels of government, community advocates, utilities, and other stakeholders to develop and implement sustainable solutions for ensuring affordable access to water for all Americans.
Christian Bonawandt is an industrial content writer for Water Online. He has been writing about B2B technology and industrial processes for 23 years.