A Scenario-based Approach for Understanding Changes in Consumer Spending Behavior in Response to Rising Water Bills

Abstract

Rising infrastructure costs for water providers and the rising cost of water for households pose several challenges for water providers, policy makers, and the research community. Consumers may utilize several strategies for coping with rising water costs including reduced water use or spending reductions on other household goods and services. To provide a first glance at the link between rising water bills and consumer spending, this study analyzes data from a household survey in the United States to understand how consumers may change spending behavior given various water bill increase scenarios. Results of this analysis provide insights into the demographics of households likely to be affected, the industries that could be affected, and at what bill increase levels these trends are most pronounced. While additional research on this topic is needed, these results suggest a stronger emphasis on long-term water management planning and allocation of resources to building and maintaining water infrastructure may be required. For utilities, this means a consideration of nonrevenue sources of funds to pay for rising water costs and strategies for making water more affordable for customers without deferring infrastructure improvements.