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.

The high health risks of unaffordable water: An in-depth exploration of pathways from water bill burden to health-related impacts in the United States

“…Increasing water bills induced participants in our study to conserve more water indoors and outdoors-a finding that is strongly supported in the literature [79][80][81]. Studies show that low-income households use less water than high-income households in the U.S. [82,83] and that lower-income households are likely to cut back on water and other household basic needs in response to even small increases in water prices [25,82,84]. Although it is common in the water industry to promote household conservation as a solution to reducing water bills [24], the evidence shows that affordability problems cannot be solved by consumer behavior alone.…”

“…Those percentages grew with each successively larger hypothetical increase in monthly water bills. Income was the most important factor explaining differences in hardship: households earning less than $50,000 a year were 11 times more likely than higher income households to say they would not be able to afford some essential goods if their water bills increased [25]. Similarly, energy insecure households that face threatened power shutoffs forego necessities in order to pay their utility bills [26,27].…”

Alternative household water affordability metrics using water bill delinquency behavior

“…While increasing bills may be less of a concern for high-income households, even small bill increases may cause financial hardship for low-income households. For example, 14% of households surveyed across the US report that a $12 increase in monthly water bills would lead to cutbacks on other essential goods [72].…”

Socio-hydrological impacts of rate design on water affordability during drought

“…In San Francisco, where both water and housing are expensive, water and sewage bills for low-income households cost up to 27% of households' disposable income [1]. When water is too expensive, some households report using less water than is healthy or reducing expenditures on other essential items like groceries or health care [7][8][9]. Water unaffordability disproportionately affects low-income and communities of color [10].…”