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Previous studies have shown that water meters for residences promote elimination of waste and increases in water rates will curtail external uses (e.g., sprinkling) of water by residences. The present study shows that large increases in water rates, even if temporary, will induce substantial, immediate, and quasi-permanent reductions in domestic (internal) water use by residences. These reductions are effected in various ways, among them, repair of leaks and more efficient use of water-using appliances.Recent articles in this journal have examined the sensitivity of residential water use to variations in water rates. The results of these studies have been mixed. Thus Howe and Linaweaver [1967, p. 19] found the demand for domestic water by residences to i•e unresponsive to rate changes: ß . . Because of the small total expenditure on water, income effects of changes in water rates will be small, and any substantial change in demand must come through the substitution effect... But what can substitute for water? It is difficult to imagine substituting other commodities for water within the household, particularly over a short time horizon when all the water-using appliances, bathrooms, etc,, are in place and operating.