Lawrence Berkeley National Laboratory

Calculating the benefits and costs of water conservation or efficiency programs requires knowing the marginal cost of the water and wastewater saved by those programs. Developing an accurate picture of the potential cost savings from water conservation requires knowing the cost of the last few units of water consumed or wastewater released, because those are the units that would be saved by increased water efficiency. This report describes the data we obtained on water and wastewater rates and costs, data gaps we identified, and other issues related to using the data to estimate the cost savings that might accrue from water conservation programs. We identified three water and wastewater rate sources. Of these, we recommend using Raftelis Financial Corporation (RFC) because it: a) has the most comprehensive national coverage; and b) provides greatest detail on rates to calculate marginal rates. The figure below shows the regional variation in water rates for a range of consumption blocks. Figure 1A Marginal Rates of Water Blocks by Region from RFC 2004Water and wastewater rates are rising faster than the rate of inflation. For example, from 1996 to 2004 the average water rate increased 39.5 percent, average wastewater rate increased 37.8 percent, the CPI (All Urban) increased 20.1 percent, and the CPI (Water and Sewerage Maintenance) increased 31.1 percent. On average, annual increases were 4.3 percent for water and 4.1 percent for wastewater, compared to 2.3 percent for the All Urban CPI and 3.7 percent for the CPI for water and sewerage maintenance. If trends in rates for water and wastewater rates continue, water-efficient products will become more valuable and more cost-effective.