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Providing water service involves a large amount of funds to deploy and maintain infrastructure. These funds are typically divided into two categories: 1. The second of these components covers the costs of new equipment, new facilities, infrastructure maintenance and rehabilitation costs to meet new regulatory requirements, such as those outlined in the Safe Drinking Water Act SDWA , [ 31 ].

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The goal in pricing water is to set rates that are low for consumers but also sufficient to recover the large fixed costs of building and maintaining infrastructure. A key facet of pricing water rests on the ability to achieve declining average costs. This means that the cost per consumer falls the greater the number of customers over which fixed costs can be distributed. Aside from the cost of providing service, another driver of water rates is the characteristics of the utility provider. In this regard, two characteristics, provider size and public or private orientation are important to consider.

Large providers serve populations of , or more while small providers serve populations of 10, or fewer [ 32 ]. The size of provider is important to consider because recent research suggests that smaller providers face a variety of challenges including diminishing customer bases, fewer financial resources, and a lack of engagement in long-range planning [ 32 ]. In addition to provider size, the public or private orientation of providers also factors into water rates.

In the United States, private entities can make a profit on water services while public providers are required to price water on a cost-recovery basis [ 12 ]. This means government-owned utilities are responsible for setting rates while investor-owned utilities set rates via water rate cases [ 33 ]. In both the government and investor-owned utility situations, the public plays a role in setting rates [ 33 ]. Private providers, however, set rates differently and are not mandated to restrict rates to cost recovery alone.

Thus, several studies find that the rates of private entities exceed those of public providers [ 12 — 15 ]. While the majority of U. From this perspective, privatization offers the option to earn profits on water services, which may be used to fund other initiatives and balance city budgets [ 13 ]. From an affordability perspective, all of these pressures on water resources and infrastructure forebode rising water rates for consumers. However, the implications of these rate increases on the affordability of water services for U. Instead, much of the work on affordability has emphasized the perspective of water providers [ 8 , 34 — 36 ],.

Although this body of work acknowledges affordability issues for low-income households [ 8 , 34 ] more work is needed to assess who is impacted and where impacted households are located. In the United States, there is no national database about water prices at the community level. This makes national level assessments of affordability challenging. If information about water prices is needed, there are two ways to obtain it.

The first way is to scrape price information from provider websites or call providers to get pricing information. A study of water prices in the Great Lakes region used this approach to collect sample data on water rates [ 37 ]. The second approach, which is used frequently in water pricing analyses [ 38 ] is to use information from the American Water Works Association AWWA biennial survey of water and wastewater rates.

AWWA is the largest non-profit association in America dedicated to research and education about water management and treatment [ 39 ]. Table 1 provides a breakdown of the providers reporting information about their year-round residential rate structure. Aside from rate information, the survey collects a wide range of characteristics about retail and wholesale providers including: location and municipalities served, sales volume, source of water, size of the provider and ownership model [ 22 ].

Of all the content in this survey, information from the median household affordability section of the summary report was of primary importance. From this information, it was possible to compute the annual water bill in dollars for a residential customer for each consumption tier. The formula for this calculation is as follows:. After obtaining the annual water bill for each consumption tier for each provider, the per gallon cost of water was computed for each consumption level S1 Table.

This was necessary for two reasons, one, to evaluate whether the unit cost of water is associated with the water consumption level. Two, to compute the annual cost of water for water consumption levels outside those provided in the AWWA survey. For example, the EPA considers average consumption to be 12, gallons 45, The general formula for this calculation is as follows:. After computing this per gallon cost for combined water and wastewater service at each consumption level, these unit costs were averaged to obtain a per unit cost for a gallon liter of water.

This number includes service fees for both water and wastewater services and did not vary according to the volume of water consumed. Aside from this flat per unit price across consumption levels, an average cost is also used because conversations with utility managers revealed this is industry practice for comparing the cost of water services across different providers. Based on this unit cost information, annual water bills were computed for monthly water consumption of 12, gallons per month 45, Table 2 contains the annual water cost for 12, gallons 45, Computed annual water bills were verified against existing price information from Circle of Blue, which reports monthly water bills for a sample of U.

Thus, the annual water rates used in this paper are somewhat more conservative, but in line, with those outlined by Circle of Blue. The emphasis in this study will focus on the combined criteria of 4. This approach is similar to a recent analysis of water affordability for the state of California [ 18 ]. To compute the number of households affected, it is possible to find the number of households with median incomes that fall below this affordability threshold. These data were obtained per the suggestion of prior studies [ 34 ], which recommended additional indicators of economic stress be considered to assess the severity of affordability issues, in addition to income based indicators alone.

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Census tracts are used as the unit of analysis because they approximate neighborhoods within metropolitan areas [ 42 , 43 ]. Table 2 contains estimates of average annual water rates based on 12, gallons 45, To understand the number of households affected by rising water rates, the median household income MHI needed to afford the billing rates in Table 2 was computed. As mentioned previously, this is based on the 4. Households for whom water bills comprise 4.

To determine the number of households for whom water is unaffordable, a count of the number of households with median incomes below the threshold income provided in Table 2 was tabulated. For example, based on water rates, 13,, households or Households with incomes below this threshold allocate more than 4. While this may not seem problematic, this means that these households will have to allocate monies from other expenses to pay for water.

Although this may not be a problem for higher income households, this is an issue for low-income and households in poverty who barely make enough money to pay for basic living expenses. Table 2 is valuable because it provides a quick reference, based on current water bill levels, for understanding the potential affordability of water for households of varying income levels. As described previously, the number of households facing potential affordability challenges was determined by tabulating the number of households below the income threshold necessary for water to be affordable which is 4.

Here, it is important to note that income figures from are used and not projected to increase over the next five years. This is based on no change or flat trends in household incomes over the last twenty years [ 44 ]. This is concerning given the conservative nature of these projections. These projections are also alarming given the types of people that are likely to be affected by water affordability challenges.

This income threshold is used because it is the household income needed to afford the average water bill for a household of four consuming 12, gallons 45, Next, analysis of variance ANOVA was used to determine statistical differences between these two groups of census tracts. Table 4 contains the results and additional statistical information about this analysis including the number of observations, sum of squares between groups and within groups, and the F-statistic.

Another noticeable aspect of this table is the prevalence of disabled individuals, as well as concentrations of Blacks and Hispanics. These same tracts also have more people on food stamps; Combined, these results suggest tracts falling below the affordability thresholds outlined in this study face additional economic pressures, which reduce their ability to adapt to rising water rates. Given these analytical results, which highlight both income-based and contextual demographic and socio-economic pressures on households for whom water affordability is an issue now and in the future , census tracts are divided into two categories: high-risk and at-risk.

These are census tracts with likely concentrations of people who face affordability challenges based on current water rates. These at-risk tracts have concentrations of people with median incomes below the minimum income thresholds needed to afford future increases in water rates. These at-risk households make up an astonishing That means an additional 27,, households could soon face challenges in affording basic water and sewer services, if water rates rise by projected or greater than projected amounts.

To better understand the geographic locations of high-risk and at-risk groups, the percentage of all tracts in each group was tabulated by state. This was done to standardize the counts so as not to get an overrepresentation of these groups in states with a large number of census tracts.

The rankings of states with overrepresentations of these two groups are based on the percentage of tracks deemed high-risk or at-risk. The top five states with the highest percentage of tracts in the high-risk category include Mississippi, Louisiana, Alabama, Kentucky, and Arkansas Table 7. The top five states with the highest percentage of tracts in the at-risk category include West Virginia, Arkansas, Idaho, Montana, and Mississippi Table 8.

Fig 1 illustrates the location of these high-risk and at-risk tracts. Identification of these high-risk areas is particularly critical to understanding and working with utilities in planning for affordability crises, which can occur when a large percentage of consumers are unable to afford water bills. This places dual stresses on these utilities; not only are they facing increasing costs associated with maintaining and upgrading infrastructure, but a shrinking consumer base that is unable to afford these rising costs.

If unaffordable water bills from both rising costs and a shrinking population to pay for services cause residents to fall behind on water payments, this can mean the termination of services via water shutoffs. This is not only an economic and public health issue for residents with no service, but an economic issue for utility providers whohave fewer customers over which to spread the large fixed costs of water service.

This means affordability issues have cascading impacts for other customers, whose water rates may rise as utilities seek to recover the costs of service by raising rates. As water rates rise, and household incomes remain stagnant for the foreseeable future, the results of this nationwide assessment highlight a burgeoning affordability crisis for several states, and providers serving low-income households across the nation.

The highrisk and at-risk households identified in this study face compounding economic factors that impact their ability to pay for water services. These factors include higher rates of unemployment, lack of health insurance coverage, and a reliance on foods stamps and public assistance. From a geographic perspective, populations most likely to suffer from rising water prices are concentrated in low-income states across the United States.

They are also spatially clustered within metropolitan areas across the country, which is likely problematic for utilities who have high numbers of customers in these high-risk and at-risk groups. Thus, while water rates are currently unaffordable for an estimated More dramatic rate increases could place an even larger segment of the population at-risk.

The privatization of water services could also mean much higher water rates for customers. That said, there are some limitations to this study that are important to note. First, water rates between providers are highly variable within metropolitan areas [ 22 ]. Thus, the sample of providers used to compute the average water rate in this study is not necessarily indicative of the water rates that all consumers pay. Second, incomes within census tracts are highly variable which means that the financial ability to pay for water services within metropolitan areas is also highly variable.

Third, the study makes use of data from the American Community Survey ACS , which is subject to a large degree of sampling error. This means that the median income figures used and the number of households that fall above and below this benchmark are variable and could change the percentage of high-risk and at-risk tracts estimated in this study. This analysis revealed that the states with a large number of high-risk and at-risk census tracts were robust to this change in the unit of analysis.

Given the potential impact of rising water rates on a large segment of the population, solutions are needed to resolve this burgeoning affordability issue. Unfortunately, in the United States, assistance programs to help resolve affordability problems for consumers is left to the discretion of individual water providers [ 10 ].

A common approach for dealing with delinquent accounts is to shut off water services [ 5 , 48 — 51 ], and there is little households can do to combat this because there is no federal statute or policy that ensures water access for poor residents [ 19 ]. There are also no national standards to protect vulnerable populations children, the elderly, disabled, and pregnant women against the termination of water services due to default on payments, nor are there any federal laws or policies governing water affordability [ 10 ].

While affordability standards have been adopted by the United Nations and also the U. S EPA, the issue is that none of these standards have any legal framework regarding the enforcement of these standards. Given this lack of protection for vulnerable populations and other low-income consumers, it has been recommended that federal laws be put into place, similar to those in the United Kingdom, that make it illegal for service providers to disconnect water service due to nonpayment or delinquent payments [ 10 ].

While there are a variety of strategies for reducing the financial burden on families, there are four basic types of assistance that could be devised.

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The first type of assistance would help all water consumers, and that is the financing of infrastructure outlays and improvements by the state and federal government. This approach would reduce the burden on individual providers and reduce the need for increased water rates, because it reduces one of the primary stressors on water rates, rising infrastructure costs.

To do this, formal guidelines would need to be developed to determine who qualifies for assistance.

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Another means of subsidizing low-income households would be the use of community assistance programs to help households pay water bills. In this scenario, non-profit organizations collect and use donations to help households pay their bills [ 34 ]. A third type of strategy would involve a restructuring of water rates to reduce the financial burden on low-income consumers. This type of solution, and the best way to structure water rates, has received a lot of attention [ 17 , 34 , 52 ].

Recent research highlights that rate restructuring is a utility strategy for ensuring cost-recovery of the rising costs of water service [ 6 ]. Unfortunately, a rise in the fixed costs or minimum monthly bill for all customers enhances disproportionately the financial burden on low-income households who already face challenges with paying for service [ 7 ]. Raising consumer awareness about water use and water costs is a fourth strategy that could be implemented by utilities to help low-income households manage water use and budget for water costs [ 34 ].

This type of approach includes a range of options such as consumer counseling, increased frequency of water bills, and the promotion of water conservation strategies to reduce water use [ 34 ].

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  • As a variety of pressures on urban water systems from climate change, suburbanization, shrinking populations in deindustrialized cities, and rising costs of infrastructure grow, a range of actors governments, utilities, and consumers will need to work together to solve a growing affordability problem. Water is a fundamental right for all humans [ 53 ].

    However, a growing number of people globally face daily barriers to accessing clean, affordable water. Thus, it is in the best interest of all people to work to resolve the rising costs of increasingly scarce water resources. This includes utilties who have a vested interest in solving the affordability riddle to mitigate the costs of unaffordable water that include water shut-offs, unpaid accounts, and the time and cost associated with debt collection efforts [ 8 ]. The goal of this study was to bring a geographic perspective to this topic in a United States context, which remains a comparatively understudied country in international work on water affordability issues.

    The hope of this piece is that enhanced awareness of this issue in the developed world will highlight the severity of this issue, which is not isolated to people in the developing world. National Center for Biotechnology Information , U. PLoS One. Published online Jan Elizabeth A. Jaymie Meliker, Editor. Author information Article notes Copyright and License information Disclaimer. Competing Interests: The authors have declared that no competing interests exist. Conceptualization: EM. Data curation: EM SW. Formal analysis: EM. Funding acquisition: EM. Investigation: EM SW. Methodology: EM.

    Project administration: EM.

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    Resources: EM SW. Supervision: EM. Validation: EM SW. Visualization: EM SW. Writing — original draft: EM SW. Received Sep 17; Accepted Dec This is an open access article distributed under the terms of the Creative Commons Attribution License , which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.

    This article has been corrected. See PLoS One. This article has been cited by other articles in PMC. Abstract While basic access to clean water is critical, another important issue is the affordability of water access for people around the globe. Introduction While basic access to clean water is critical, another important issue is the affordability of water access for people around the globe.

    Assessing and Measuring Water Affordability Affordability is not only an issue for customers in the United States but for utility customers around the globe. Measuring Water Consumption Aside from the variability of water rates at a variety of spatial scales, the extent that water rates are deemed affordable depends on the water consumption level analyzed and the affordability benchmark used.

    Pricing Water Providing water service involves a large amount of funds to deploy and maintain infrastructure. Methodology In the United States, there is no national database about water prices at the community level.

    Managing Water For All An Oecd Perspective On Pricing And Financing 2009

    Open in a separate window. Table 2 Affordability Assessment in dollars. Variable Definition Percent Disabled Percentage of the civilian non-institutionalized population with a disability Median Income White Median income of the White population in a Census tract. Percent Black Percentage of the tract population that is Black. Percent Hispanic Percentage of the tract population that is Hispanic. Percent Gross Rent Median gross rent as a percentage of household income Percent Unemployed Percent of the civilian population 16 years and older that is unemployed.

    The charge rates could be different between surface and ground water users e. The charge could also vary by season, depending on the availability of water. It is difficult to prescribe the correct level of abstraction charges in each situation, since they vary according to hydrological estimates, demand projections, alternative uses, the cost of developing alternative water sources, etc. The important principle is to confront abstractors with a cost associated with their water use, which is large enough to figure in their calculations, and which is a factor in their decisions.

    Abstraction charge should be volumetric, though this is not easy to police — a more common practice is to levy a fixed charge in proportion to the maximum permitted extraction, which is then monitored from time to time. Ground water extraction, e. The supply of raw or bulk water needs major infrastructure and other works in catchment management, afforestation, dams, reservoirs, pipelines, etc.

    These charges are normally at a lower rate than for consumptive use, although non-consumptive use does entail some opportunity cost, where water is stored, released into a different part of the catchment, or with its quality or temperature altered. Volumetric tariffs the amount of water used , are more versatile than fixed charges and can provide an incentive for careful use. They all need proper meters and appropriate rates to be fair and effective. Tariffs typically combine a fixed and variable element to cover overhead and operating costs respectively. The latter signals to households the cost imposed on society from treating the water that they consume.

    Industrial effluent charges are normally levied on the company discharging the wastewater, based on the estimated presence of specific constituents in the effluent.