Water For All ❖ People’s Policy Project

The Flint, Michigan, water crisis has dramatically illustrated poor people’s lack of access to clean drinking water in the United States. But beyond lead contamination, there are more ways this country denies people that basic human right. The inability to pay water bills has become a significant problem for poor people.

Even before the COVID-19 pandemic and accompanying economic downturn, an estimated 1 out of every 20 households, or about 15 million people, had their water turned off at some point during the year because of nonpayment.1 In New Orleans, more than 75 percent of low-income residents have water bills that industry analysts say are unaffordable.2 During the pandemic, an estimated 9,052 people died as a result of water shut-offs.3

Like all issues related to poverty, the problem of water affordability disproportionately harms Black people, making this a racial justice issue.4 The amount of household income spent on water is more than twice as high in majority Black cities as majority white cities.5

Most water for bathing, cooking, and drinking in the United States is provided by utilities, about 80 percent of which are publicly owned.6 Water utilities are funded by a combination of government money, user fees, municipal bonds, and private loans.7 Though household fees are often thought to discourage overuse, data show that demand for water is relatively fixed, and raising prices produces little reduction in usage.8 Furthermore, residential water use accounts for just 8.2 percent of overall water usage in the United States.9

The most effective and equitable solution to the affordability problem is to eliminate residential fees and simply fund water utilities entirely with progressive taxation. If governments are interested in reducing overall water consumption, there are a variety of other options such as physical infrastructure that limits the amount of water that flows through fixtures, water recycling, or limiting the largest users of water, which are farms and industrial facilities.

The Affordability Problem

Two related, but distinct, problems characterize the term “water affordability”:

Poverty. Many people in the United States have low amounts of income and no or negative wealth. This makes it difficult for them to afford their household expenses, including rent, food, and water utility bills.10 In addition to their inability to pay, poor people who have bad credit scores are often seen as risks to utilities, which force them to pay high deposits or sometimes even deny them water service altogether.11

“Older Housing In The Black Community On Chicago's West Side.” U.S. National Archives / EPA.

Public Disinvestment. Despite overall water consumption decreasing,12 people’s water bills are getting more expensive, in part because of decades of federal disinvestment from public infrastructure. Federal spending on water has dropped steadily since the 1980s.13 Utilities’ costs have risen, in part because of climate change,14 and those costs are passed on to the public through increasing rates.15 Private utilities, which serve about 20 percent of the population, exist to make a profit and have higher water rates than public utilities.16 As federal spending on water has fallen, private water utilities have been on the rise. From 2010 through 2020, just 12 large, for-profit water companies acquired 353 water utilities at a total cost of about $5.8 billion.17

“Old Cars Serve as Water-Break on Navajo Reservation.” U.S. National Archives / EPA.

The Water Affordability Solution

Water rates function as consumption taxes that fund infrastructure projects, much like gasoline taxes help fund highway maintenance and construction.18 In theory, these taxes can be used to influence consumer behavior to decrease usage. In practice, households largely cannot and do not respond to increased water rates by reducing consumption.19 Replacing water bills with more progressive sources of funding would increase access and improve the income distribution without causing overuse.

Eliminating water bills not only ensures universal access for those with housing, it also lowers utilities’ costs by reducing the need for billing and collections staff. Fees and rates alone cannot maintain our water system; only about 17 percent of utilities say they can maintain existing service without additional funding sources.20

“Public Playground on the Charles River, near Soldiers Field Road.” U.S. National Archives / EPA.

Water utility costs can be broken down into two broad categories.

Capital expenses, including the upfront costs of building new water infrastructure and the continual cost of maintaining it.

Operating expenses, which go into the day-to-day production and distribution of clean water.

At present, capital expenses are often covered by loans taken out by utilities and repaid by the fees collected from water users. The main federal funding mechanism for drinking water is the State Revolving Loan Fund (SRLF), which provides low-interest loans to utilities. The SRLF provides useful financing for utilities across the country, but many smaller utilities struggle to pay those loans, and some states struggle to provide the required matching funds.

Water infrastructure did not always depend so heavily on loans. In the 1970s and early 1980s, the federal government provided significant grant money to water utilities. There are still a number of federal grant programs, including Water Infrastructure Improvements for the Nation Act (WIIN), Public Water System Supervision (PWSS), Tribal Public Water System Supervision, and Training and Technical Assistance for Small Systems.21

Congress should revive this approach and replace water infrastructure loans with grants. This would ensure that all utilities can afford to build out and maintain necessary infrastructure as well as eliminate the water rates that are used to directly or indirectly finance capital expenses.

Water utilities’ day-to-day expenses are currently distributed down to users through water bills. Replacing these charges with more progressive taxes would allow for the total elimination of residential water bills and result in a more equal distribution of income and consumption. Any level of government could do this. Municipalities could use property taxes to eliminate user charges, states could use state income or sales taxes, and the federal government could use the federal income tax. But if equality is the goal, it is worth noting that the federal tax system is currently much more progressive than state tax systems.22

This is not a new idea. Ireland does not charge residents for water and an effort to introduce charges in 2014 led to such immense backlash that the government scrapped them two years later.23 Some US cities have already begun experimenting with progressive water billing. For example, Philadelphia offers income-based water rates for those whose income is below 150 percent of the federal poverty line.24 Though this is good because it caps the amount any one household pays for its water bill, only households that apply are enrolled in the program. There are poor households that would qualify but are not receiving the benefit because they haven’t filled out the paperwork. Eliminating rates and fees altogether would be more effective.

Curbing Utilization

A natural objection to making residential water free is that it will cause overutilization and waste.

One problem with this objection is that there are many housing units in the country where water is already not metered for several reasons: it is paid for on a building-wide basis; it is included in rent; or the utility bases bills on estimated use, which is just an average of use in the area. In these cases, water is already free at the margin and yet overuse does not appear to be a significant problem.

Moreover, in areas of the country where limited water supply is a concern, prices are not the preferred method for controlling it. Instead of relying on rates, utilities and governments can and do use a variety of tools to decrease usage, including:

Repairing water infrastructure, which loses an estimated 14–18 percent of treated water on the way to people’s homes.25
Fixing household leaks, which account for 1 trillion gallons of lost water every year and increase residential bills.26 Government programs already exist that help households repair plumbing leaks.27
Restricting lawn watering.28
Water recycling, which is the process of treating wastewater for reuse.29
Water efficiency standards for plumbing fixtures, which have been in place for decades and have reduced usage. For example, the George H.W. Bush administration introduced federal water efficiency standards in 1992, and the Water Research Foundation found that indoor usage has decreased by 22 percent since 1999 as a result.30
Eliminating nonfunctional grass,31 the country’s most common irrigated crop.32
Focusing on the biggest users of water, which are heavy industry and agriculture.33

“Wildflowers on Nevada highway, May 1972.” U.S. National Archives / EPA.

“Golf club at Lake Havasu City, May 1972.” U.S. National Archives / EPA.

“Housing in Las Vegas, May 1972.” U.S. National Archives / EPA.

Drinking glass

Even if you believed that water rates were useful for curbing utilization, this would only be true for water consumed beyond the bare minimum needed for a basic standard of living: drinking, cooking, bathing, flushing, cleaning, and so on. This basic amount of water use cannot and should not be cut back, meaning that charges applied to it are not affecting the relevant decisional margin. Any water utility that determined that usage charges were necessary to keep utilization within appropriate levels should provide each customer a basic amount of water for free each month and only charge for usage in excess of that amount.

Conclusion

Universal water access is a basic human right that any functioning society should ensure for its citizens. The most equitable way to do this is to eliminate user fees and fund water service through progressive taxation by the federal government. Though some argue that rates and fees are necessary to curtail consumption, there are more effective ways to decrease usage that don’t kill poor people by denying them water.

Notes