T HE SUPPLY of high-quality mu nicipal water has developed, princi pally in the last century, into one of the largest industries in the US. At the present time, more than 170 million Americans are served by public water systems. In terms of the size and value of the physical plant necessary to ren der that service, the water-utility in dustry is second only to the electricpower industry.The current replacement value of public-water-supply systems through out the country is in excess of $50 bil lion, which is equivalent to an invest ment of $339,000 per employee, sub stantially higher than the comparable statistic for any other industry. (Re placement value of water-utility facili ties was obtained from an AWW A Staff Report,1 adjusted to 1970 by the authors. Utility employment ratios were obtained from Seidel and Cleasby.2 ) The capital-turnover ratio (gross annual revenues divided by to tal investment) has been estimated at 0.2 in the water-utility industry, com pared with 0.3 for electric utilities, 0.4 0.6 for other utilities, 2.0 for manu facturing industries, and 4.0-6.0 for retail and wholesale trade enterprises.8A dominant economic characteristic of water utilities is, then, the large in-The terms "water requirements" and "water demands" are fre quently used interchangeably. In the language of economics, how ever, these words have special meanings. Here is the first of four articles by these authors that delve into water demand.