Pricing wastewater to save water: Are theory and practice transferable?

Wastewater pricing by centralized utility systems enjoys little attention. Ongoing concern about water resource adequacy has prompted interest in deploying wastewater pricing to encourage water conservation. We emphasize that rate policy should be informed by an understanding of how essential water and wastewater services differ. Specifically, we ask whether a change in volumetric wastewater rates will induce a usage response like that anticipated for a comparable change in water rates. We observe that water is a resource input and wastewater is a byproduct of indoor water use that is largely nondiscretionary and unlikely to be very price-responsive.