Growing Toward More Efficient Water Use:

Linking Development, Infrastructure, 

and Drinking Water Policies
Acknowledgements

This report was written by Paula Van Lare of EPA’s Development, Environment, and

Community Division and Danielle Arigoni of ICF Consulting. We would like to recognize the

following individuals for their contributions and comments on earlier versions of this document: Buddy Atkins, South Carolina Public Utilities Commission; Jan Beecher, Michigan State

University; Keyvan Izadi, National Association of Homebuilders; Bob Kaufman, Augustine

Development; Lora Lucero, Esq., American Planning Association; Tim Williams, Water

Environment Federation, and Kristin M. Anderson, Benton County Planning Department. We

also would like to recognize the peer reviewers of this document: Professors Jan Beecher,

Michigan State University; Jesse Richardson, Virginia Polytechnic Institute and State

University; and A. Dan Tarlock, Chicago-Kent College of Law. We would like to acknowledge

EPA staff who provided comments: Steve Allbee, Jane Anderson, Jamal Kadri, Sylvia Malm,

Phil Metzger, and Peter Shanaghan, all of EPA’s Office of Water; Geoffrey Anderson, Lynn

Richards, Megan Susman, and Tim Torma, all of EPA’s Development, Environment, and

Community Division.

For additional copies of this report, please send an e-mail to smartgrowth@epa.gov. For an

electronic version, please visit: <www.epa.gov/smartgrowth>.

About the EPA office that produced this report:

Development, Community, and Environment Division (DCED) 

DCED works with communities, states, and the development industry to help them reach

more environmentally friendly development alternatives while improving economic conditions and quality of life. DCED provides information, education, and technical assistance. For

more information about EPA’s smart growth program, visit <www.epa.gov/smartgrowth>.

Cover Photos:

Paul Muldower, FAIA (top left)

Ellen Greenberg (bottom right)
Contents

1. LAND USE DECISIONS AND WATER SYSTEMS . . . . . . . . . . . . . . . . . . . . . . . 1

1.1 Residential and commercial water use in context . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

1.1.1 Water-poor communities are often high-growth communities . . . . . . . . . . . . . . . . . . 2

1.2 Development patterns and water demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

1.2.1 Large lots increase water demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

1.2.2 Low density means more leakage and increases both demand and cost . . . . . . . . 4

1.2.3 Building new systems while deferring maintenance on older ones worsens 

water losses and raises costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

1.2.4 Development on and beyond the fringe can reduce return on investment 

in infrastructure and raise costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

2. SMART GROWTH CAN HELP COMMUNITIES REDUCE COSTS

AND CONSERVE WATER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

2.1 Compact development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

2.1.1 Smart growth promotes compact development, reducing infrastructure costs . . 8

2.1.2 Smart growth promotes compact neighborhood design, 

reducing water demand. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

2.1.3 Smart growth directs development to existing communities—and their 

infrastructure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

2.2 Spotlight on reduced water cost and use: Envision Utah . . . . . . . . . . . . . . . . . . . . . . . . 9

3. POLICY OPTIONS TO BETTER MANAGE WATER DEMAND . . . . . . . . . . . . . 12

3.1 State governments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

3.1.1 Administer the state revolving funds to support smart growth. . . . . . . . . . . . . . . . . 12

3.1.2 Fix it first . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

3.1.3 Authorize the formation of special districts to finance water system 

expansion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

3.1.4 Connect water and land use planning to provide predictability in the 

development process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

3.1.5 Clarify a utility’s “duty to serve” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

i

Growing Toward More Efficient Water Use: Linking Development, Infrastructure, and Drinking Water Policies

Contents
3.2 Local and regional governments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

3.2.1 Integrate water budgeting into land use planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

3.2.2 Use private activity bonds strategically to finance upgrades in existing service

areas and planned growth areas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

3.2.3 Introduce service availability fees to better capture marginal cost of system 

expansion and household water demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

3.2.4 Encourage natural landscaping in residential and commercial buildings . . . . . . . 21

3.3 Utilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

3.3.1 Fix it first . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

3.3.2 Set rates that fully cover costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

3.3.3 Implement conservation pricing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

3.3.4 Implement zone pricing for water users . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

3.3.5 Engage a citizens’ advisory committee on water . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

END NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

Growing Toward More Efficient Water Use: Linking Development, Infrastructure, and Drinking Water Policies

ii Contents
1. Land Use Decisions and Water Systems

In many communities, growth has brought problems related to water. Growth affects costs of

water infrastructure, demand for water, and efficiency of water delivery. However, the relationship is a dynamic one: water policies influence growth decisions and outcomes—which in

turn affect infrastructure and water resources. 

Communities face two growing and related issues: huge financial needs for water infrastructure and concerns about the availability of water. Drinking water utilities will have to increase

their spending by $263 billion over the next 20 years to maintain adequate service,1 money

that will come from either increased water rates or taxes or both. Cities and towns in the arid

West have long faced water scarcity; now cities across the country—even in areas with plentiful rainfall—are facing water shortages. The city of Frederick, Maryland, was forced to impose

a building moratorium in 2001 as it scrambled to secure a new source of water and build a

new treatment plant.2 A subsequent ordinance setting out priorities for allocating scarce

water among development projects remains in effect.3 On a larger scale, Alabama, Georgia,

and Florida have fought in and out of court for 15 years over water allocations from two major

river basins that they share. As these three states continue to grow rapidly, resolving their

water claims becomes ever more urgent. Even states and provinces along the Great Lakes are

taking measures to promote water efficiency and prevent the export of water outside the

watershed. Although the Great Lakes are the largest reservoir of fresh water in the world,

water experts warn that changes in policies and practices are necessary to preserve the lakes’

contribution to the region’s quality of life and economic growth.4

Water availability and cost are also related to the quality of existing and potential source

waters. Utilities must use more chemicals and other treatment methods to bring polluted

water up to national standards for drinking water, thus increasing its cost. The quality of

source waters depends in part on the ability of surrounding land to filter out potential pollutants. Many areas are working to preserve land that is critical to protecting source waters.

Preserving undeveloped land by focusing development in appropriate areas is emerging as a

key strategy for maintaining water quality. This topic is covered in greater depth in a recent

U.S. Environmental Protection Agency (EPA) publication, “Protecting Water Resources with

Smart Growth,” and will not be covered in depth here.

This report focuses on the nexus between water and growth. Part I summarizes the challenges

of meeting demand for safe drinking water. Part II asks: “Is there a way to accommodate

growth that minimizes its effects on water consumption and distribution costs?” Part III asks:

“What water policies can support this type of growth?”

1.1 RESIDENTIAL AND COMMERCIAL WATER USE IN CONTEXT

Only 1 percent of the Earth’s total water is fresh water available for use. In the United States,

nearly two-thirds of this resource is ground water, which supplies water for 95 percent of 

rural households, half of all agricultural irrigation, and one-third of industrial water needs. 

1

Growing Toward More Efficient Water Use: Linking Development, Infrastructure, and Drinking Water Policies

1. Land Use Decisions and Water Systems

* Available at <www.epa/smartgrowth/publications.htm>
The remaining third is surface water, which is the primary source for public supply. Public 

water supplies serve piped water to a minimum of 25 customers and have at least 15 

service connections.5

This report focuses on public supply. Drawing on both surface and ground water, public supply

is the source of water for 85 percent of the U.S. population and represents roughly 12 percent

of all freshwater withdrawals in the United States. The U.S. Geological Survey (USGS) estimates

that, of this 12 percent, household use accounts for 56 percent of all public water supplied,

commercial purposes constitute 17 percent, industrial users account for 12 percent, and public

and other uses are 15 percent.6

From 1950 to 2000, the population served by public water systems grew 159 percent, from

93.4 million to 242 million people. During the same time, public water use—primarily household, government, and commercial uses—grew 207 percent, from 14 billion to 43 billion gallons per day. Over the same period, total per capita water use has grown from 149 to 179 gallons per day. Per capita water use did not change from 1995 to 2000, but it declined slightly

from 184 gallons per day in 1990 to 179 in 1995, perhaps due to conservation efforts that have

since been overtaken by other factors.7

Although residential, commercial, and government customers account for less than 12 percent

of total water use, their use is significant. During droughts or in areas where water is scarce,

even relatively small changes in demand can make the difference between normal service and

water shortages. Consistent water service is essential to daily life; shortages and price increases

make news and can have serious political implications. While local governments often are

responsible for ensuring this water supply for residents and businesses, they have little or no

control over the largest water users: agriculture and power generation, which together account

for about 80 percent of all freshwater withdrawals. Local governments thus focus their policies

where they can have some effect: on residential, commercial, and government demand.

1.1.1 Water-poor communities are often high-growth communities 

Many areas facing rapid population growth and increasing development pressure already have difficulty providing adequate

water to their residents. A 2005 Brookings Institution report

showed that 10 of the 15 fastest-growing metropolitan areas are

in the relatively arid western states of Nevada, California, Texas,

Colorado, Arizona, and Utah.8 The West also has some of the

highest per capita residential water use in the nation. Lack of rain

and its residents’ landscaping preferences contribute to per capita

water use in the West that far exceeds the national average of 179

gallons per day. In Colorado average use is 240 gallons per day, in Utah it is 292, and in Nevada

it is 336.9 The combination of high growth rates and high water use is rapidly depleting aquifers

in the region. Aquifers in the Denver region are falling 30 feet per year, and the Texas portion of

the High Plains aquifer has decreased by 27 percent over the past 50 years.10

Drought can further compound the difficulties of meeting demand even in areas not typically

considered to be water poor. A drought that began in 1998 eventually led the Delaware River

Growing Toward More Efficient Water Use: Linking Development, Infrastructure, and Drinking Water Policies

2 1. Land Use Decisions and Water Systems

Utah is not only one of the

fastest growing areas, it is

also one of the thirstiest,

with an average per capita

use more than double the

national average.
Basin Commission to issue a drought emergency in 2001 that reduced allotments for New

York City and the four states that draw on its supply.11 By the summer of 2002, half of the continental United States experienced drought conditions ranging from mild to extreme, triggering widespread water restrictions in many cities across the country.12

1.2 DEVELOPMENT PATTERNS AND WATER DEMAND

Population and economic growth inevitably create more demand for water. How that growth

takes place affects how much additional water is needed and how much it will cost to deliver.

The most common characteristics of new conventional growth—large lots, low density, and

dispersed development—all increase the cost of delivering water. Homes on large lots and

commercial facilities often consume large quantities of water for lawns and landscaping. 

Low-density, dispersed development requires longer pipes, which lose more water through

leakage and raise transmission costs. Infrastructure investments that support water system

expansion over the upgrading and maintenance of existing networks can lead to increasingly

inefficient systems, greater waste, and higher capital and operating costs. 

1.2.1 Large lots increase water demand 

Large lots are a major contributor to both residential and commercial water use. Lawn care,

car washing, swimming pools, and other outdoor uses can account for 50 to 70 percent of

household water use.13 Lawn care alone accounts for an average of 50 percent of all household water use nationally.14 Office buildings also use significant quantities of water for landscaping. According to the USGS, “lawn watering and air conditioning use more water than sanitation or cleaning”15 in commercial buildings. As would be expected, the amount of water

used for lawns varies significantly from region to region based on local climate. 

However, no matter where they are, areas with low density, large lots, and large lawns require

more water than areas with high density, small lots, and small lawns. In 1997, the Minnesota

Department of Agriculture estimated that in Minnesota, the average lawn size in more compact urban watersheds measures 0.05 acres (2,250 square feet), while suburban lawns average

over four times that size, at 0.21 acres (9,265 square feet).16 In Utah, planners have determined

that water demand drops from approximately 220 gallons per capita per day at a density of

two units per acre, to about 110 gallons per acre at a density of five units per acre.17 In a study

of household water use in Sacramento, California, demand by units in the Metro Square development (a neighborhood of 46 single-family homes on compact lots) was 20 to 30 percent

less than demand by their suburban counterparts.18 A study of Seattle-area households found

that moving from 12 dwelling units per acre to four units per acre decreases density by 67 

percent but increases water use for landscaping by 158 percent per household. Put another

way, Seattle homes on 6,500-square-foot lots use 60 percent less water than those on 

16,000-foot lots.19

Lot size also increases the length, and thus the cost, of the pipes serving households and commercial buildings. Neighborhood water pipes fall into two types: transmission mains that run

under or along streets and distribution mains that connect each house or building to the

transmission pipes. A house on a smaller lot typically is closer to the transmission main, and

3

Growing Toward More Efficient Water Use: Linking Development, Infrastructure, and Drinking Water Policies

1. Land Use Decisions and Water Systems
thus a shorter distribution main. Neighborhoods with smaller lots will have more houses per

block of transmission main, so the cost of that main will be less per house than in neighborhoods with larger lots.

A recent study in the Journal of the American Planning

Association used an engineering cost model to assess the

influence of land use on the cost of water distribution and

sewer services. The study estimated service costs at $143

for a household located on a 0.25 acre lot in a compact

development near the service center. If the same household moved to a 1-acre lot in a similar location, its annual

service cost would be $272, even if it did not increase its

water use. If that household used the same amount of

water on a 1-acre site in a dispersed development far from the service center, its water and

sewer service would cost $388 annually.20 Although this analysis looked at the cost of both

water and sewer service, the cost of water only would be lower than the numbers given 

here, but the relationships among infrastructure cost, distance, and lot size would remain

essentially the same.

The study found that the infrastructure and pumping costs of water service are more sensitive

to lot size than any other factor. The principal source of this difference is the longer distribution mains required for larger lots. Costs for water transmission mains will be higher for developments farther away from the water supply source, but transmission mains account for an

average of only 16 percent of the total infrastructure and pumping costs. 

In some communities, developers—and ultimately property owners—are required to pay the

cost of providing water service to new developments. Other communities, however, impose

these costs on the existing water system, ultimately passing the costs on to all system users.

When existing systems pay to extend service to new, large-lot, dispersed developments, they

generally raise all water rates, effectively forcing existing users, including those on small lots in

central areas, to pay for service to new users. 

1.2.2 Low density means more leakage and increases both demand and cost 

All water systems leak. They leak both through pipes and

at joints. Depending on their condition, drinking water

systems can lose 6 to 25 percent or more of their water

through leaks and breaks.21 In 1995, water systems in 

the United States leaked 25.3 billion gallons of water 

per day (approximately 9.2 trillion gallons per year).22

Two major factors determining leakage are length and system pressure. Longer systems leak

more than shorter ones; systems that operate at higher pressures leak more than systems that

operate at lower pressures. Systems in low-density areas must use higher pressures to push

water through longer mains. Because low-density areas tend to have higher demand for water

for lawns, water pressures must be increased even more during dry months.23

Growing Toward More Efficient Water Use: Linking Development, Infrastructure, and Drinking Water Policies

4 1. Land Use Decisions and Water Systems

Lot size has a greater

effect on water system

costs than how 

isolated a site is or 

how far it is from the

water service center. 

Water systems lose 6 to 25

percent of their water

through leaks and breaks.
Once again the form of development affects water use. Development that is more spread

out—less dense—needs a longer system than development that is more compact. Therefore, in general, water systems in less dense developments will leak more than systems in

compact developments. 

Of course, if the central pumping station is located on the urban fringe, nearby low-density

users will not generate as much loss as their more distant counterparts in other parts of the

metropolitan area. Nonetheless, highly dispersed communities will need longer systems and

incur greater loss overall than would more compact communities, regardless of where the

main pumping system is located.

Leaks are a financial burden for drinking water systems, imposing costs that are ultimately

borne by ratepayers or, if the system is subsidized, taxpayers. According to one researcher:

Lost water is lost money....If losses are caused by leaks, you’ve lost the money it

cost to produce or purchase that water. In some cases, curbing large water losses from leaks can save a town or district the cost of finding additional water

sources. Wasted water means wasted dollars. Since 1989, [the Kansas Rural

Water Authority] has completed 564 water loss surveys locating an annual loss

of 2.387 billion gallons. The annual costs to purchase or produce this loss would

have been $3.586 million.24

1.2.3 Building new systems while deferring maintenance on older ones worsens water

losses and raises costs

Many water systems throughout the country face maintenance backlogs and looming replacement costs. Older pipes and joints leak more than newer ones, and all pipes need to be

replaced at the end of their useful lives.25 Demand for new water systems in developing areas

may lead communities to lay new pipes rather than fix old ones. As a result, the leakage and

breaks common to older systems grow, and the cost of operating an increasingly inefficient

system grows with them.

The American Water Works Association (AWWA) estimates that large portions of many water

infrastructure systems will have to be replaced over the next 30 years.26 The Government

Accounting Office (GAO) estimates that 20 percent of pipelines are already near the end of

their useful life in one-third of utilities, and that more than half of pipelines are near the end of

their useful life in approximately 10 percent of utilities.27 Replacing obsolete infrastructure

simply to maintain existing service will require utilities to find new revenue, either from rate

hikes or public subsidies. EPA estimated that even if utilities could increase their revenue by 3

percent per year (above inflation), they still would be $45 billion short of what they will need

to replace deteriorated pipes over the next 20 years. Without revenue growth, they will fall

$102 billion short of their replacement needs and $161 billion short of their operations and

maintenance needs.

GAO found that roughly 29 percent of utilities defer maintenance because of insufficient

funds, noting that “public drinking water utilities are more likely than their privately owned

counterparts to defer maintenance and major capital projects.”28 GAO also reported that while

5

Growing Toward More Efficient Water Use: Linking Development, Infrastructure, and Drinking Water Policies

1. Land Use Decisions and Water Systems
most utilities preventatively rehabilitate and replace their system pipelines, roughly 60 percent

of water utilities state that the rate of preventative work is less than desired, and many have

deferred maintenance, capital expenditures, or both. While many utilities have plans to finance

future capital needs, almost half believe that their projected revenues would be insufficient to

carry out their plans.

1.2.4 Development on and beyond the fringe can reduce return on investment in 

infrastructure and raise costs

Another way development patterns affect cost is

through the location of new development. Building 

new infrastructure to serve developments on the urban

fringe can decrease the overall return on a community’s

water infrastructure investment. Often, metropolitan

service areas have excess capacity. Adding new developments to the existing network spreads the system’s capital costs over a larger customer base, lowering the cost

of water service per customer. If, instead, new infrastructure is built for these new customers, the opportunity to improve the efficiency of the existing

system is lost, leading to higher costs per customer than if the new customers joined the existing system. This phenomenon can be observed in metropolitan Cleveland, where population

shifts have led to overcapacity in parts of its suburban water system, reducing the system’s

efficiency and raising unit costs for users.29

These changes directly affect municipalities’ and users’ bottom lines. According to an official of

a large western city, it costs the city $10,000 more to provide infrastructure services to a house

on the suburban fringe than one in the urban core.30 Systems that operate at less than full

capacity also increase the per unit cost for water delivery. Recognizing this dynamic, Fluvanna

County, Virginia, stated in its 2000 Comprehensive Plan: 

If a water and sewer system is developed, it should be provided in a cost efficient and effective manner. Service costs associated with this type of infrastructure are strongly influenced by a development’s location and density. Therefore,

any new system should be located within existing communities that are also

growth areas. This provision will allow for the county to build upon existing

infrastructure while providing new infrastructure in the areas where it is most

needed.31

Growing Toward More Efficient Water Use: Linking Development, Infrastructure, and Drinking Water Policies

6 1. Land Use Decisions and Water Systems

One local official estimates it costs his city

$10,000 more to provide

infrastructure to a suburban house than one in the

urban core.
2. Smart Growth Can Help Communities Reduce Costs

and Conserve Water 

The U.S. population will continue to grow. How that growth is accommodated will affect the

quantity of water needed and its cost. The research reviewed in Part 1 suggests that more

compact growth, use of existing infrastructure, and investment in system maintenance can

substantially reduce costs and make current water resources go farther. Communities across

the country are using these techniques as part of a “smart growth” strategy.

Smart growth practices promote development

that enhances the community, economy, public

health, and the environment. The Smart

Growth Network,* a coalition of more than 30

environmental, real estate, historic preservation, development, academic, and governmental organizations, has developed a set of principles reflecting the experiences of successful

communities around the nation (Exhibit 1). The

principles include encouraging compact development and leveraging scarce public funds to

improve existing assets, including water systems.

Applying smart growth principles can 

significantly reduce the cost of water provided

by communities and the quantity of water

demanded by their residents. More compact

development allows for shorter transmission

systems, making them more efficient to operate

and less susceptible to water loss through leakage. Encouraging compact neighborhood

design on smaller lots reduces water demand

for landscaping. Directing development to 

areas served by existing infrastructure and maintaining that infrastructure can make systems

more efficienct. 

7

Growing Toward More Efficient Water Use: Linking Development, Infrastructure, and Drinking Water Policies

2. Smart Growth Can Help Communities Reduce Costs and Conserve Water

Exhibit 1: Smart Growth 

Principles

1. Mix land uses.

2. Take advantage of compact 

building design.

3. Create a range of housing 

opportunities and choices.

4. Create walkable neighborhoods.

5. Foster distinctive, attractive 

communities with a strong sense 

of place.

6. Preserve open space, farmland, 

natural beauty, and critical 

environmental areas.

7. Strengthen development and 

direct it toward existing 

communities.

8. Provide a variety of transportation

choices.

9. Make development decisions predictable, fair and cost-effective.

10. Encourage community and 

stakeholder collaboration in 

development decisions.

* A list of the members of the Smart Growth Network partners and resources for communities to use in implementing smart growth

are at www.epa.gov/smartgrowth and www.smartgrowth.org.
2.1 COMPACT DEVELOPMENT

Communities can save money on new infrastructure by developing more compactly.

Commercial and residential users that are closer together will need fewer feet of pipe than

users that are more spread out. When this development takes place in areas already served by

water mains, the cost of infrastructure is further reduced. 

2.1.1 Smart growth promotes compact development, reducing infrastructure costs

Robert Burchell of Rutgers University has developed detailed models and estimates of infrastructure cost savings associated with compact development. He estimated that more compact growth nationwide would save $4.77 billion, or 6.5 percent of total water infrastructure

costs, from 2000 to 2025.32 The savings would be particularly significant in the South and the

West, where growth has been greatest and is expected to continue. 

Another analysis, published by the American Planning Association, provides a more detailed

look at the different roles played by lot size and community compactness. In one example, the

annual cost of providing water and sewer service to a half-acre lot in a centrally located, dense

development is $283 per household, while it is $472 for the same lot in a highly dispersed

development far from the water service center. The relationship between increased cost and

increased distance from the water center is mostly linear: in the highly compact, small-lot

development, each additional mile (from 1 up to 4 miles) from the center adds roughly

$50,000 to the 30-year cost of service provision per household. However, in the low-density,

large-lot development each additional mile (from 1 up to 5) adds approximately $122,000 to

the cost.33

2.1.2 Smart growth promotes compact neighborhood design, reducing water demand

As shown in Sections 1.2.2 and 1.2.3, landscaping

accounts for approximately 50 percent of household water demand and is also a significant factor in

commercial water demand. Water demand for landscaping is directly related to lot size. Compact

neighborhood design, which makes maximum use

of smaller lots, has less landscaping and thus less

demand for water. Ultimately, this could make the

difference between a community needing to develop new water sources, with the attendant costs and

environmental impact, and using existing water

sources efficiently and well into the future. 

Smart growth also promotes development with a sense of place, which can include landscaping that reflects distinctive regional ecosystems. Communities can reduce water demand by

encouraging use of native plants and ground covers that require little or no irrigation.

Growing Toward More Efficient Water Use: Linking Development, Infrastructure, and Drinking Water Policies

8 2. Smart Growth Can Help Communities Reduce Costs and Conserve Water

EPA and its partners in the Smart 

Growth Network, a coalition of 

more than 30 environmental, real estate,

historic preservation, development, academic, and governmental organizations,

have developed numerous tools and

resources to help communities improve

their quality of life. Many of these are

available at www.epa.gov/smartgrowth

and www.smartgrowth.org.
2.1.3 Smart growth directs development to existing communities—and their 

infrastructure

Communities following smart growth principles place a priority on fixing existing water systems and directing development to the areas these systems already serve. Recent studies by

AWWA and the Water Infrastructure Network have shown that much of the nation's existing

infrastructure will need to be replaced in the coming decades. Already systems are deferring

maintenance because of lack of funding and inadequate planning, according to EPA and GAO.

Expanding water systems incurs additional financial demands, in some cases further delaying

maintenance and replacement. As maintenance and replacement lag, old, badly leaking pipes

lose more and more water, raising current costs while the ultimate bill for system renewal continues to grow. Concentrating resources on system maintenance rather than expansion can

minimize the cost of delivering water during these crucial decades of system replacement. 

To encourage growth in already-developed areas, the state of Maryland has started to help

pay to upgrade inadequate city water infrastructure systems. The program’s financial assistance can be used for projects such as upgrading aging and poorly operating water treatment

facilities; replacing leaking water mains; and repairing or replacing storage tanks. Local water

authorities can also use these funds to connect residences to the public supply if wells are

contaminated or inadequate, or to upgrade existing water facilities to meet federal and 

state standards.34

2.2 SPOTLIGHT ON REDUCED WATER COST AND USE: ENVISION UTAH

Envision Utah is a public-private partnership formed in 1997 to evaluate the economic, environmental, and quality of life benefits that a new approach to growth could yield in the

greater Wasatch area (GWA), home to 80 percent of Utah residents. Through extensive public

participation and modeling, Envision Utah estimated the potential impacts to the GWA from a

"quality growth" approach that advocated strategies such as infill development, open space

preservation, and mixed-use construction. The results were based on an estimated population

increase to 2.7 million (from the current level of 1.7 million) residents by 2020 and compared

against a 1997 baseline approach that assumed no change in the way land was developed or

natural resources managed. In both the amount of water demanded and the cost of water

infrastructure, the quality growth strategy improved on the current, conventional approach to

growth.

Envision Utah proposed four development scenarios for the project, ranging from low-density,

auto-oriented (Scenario A) to very compact, transit-oriented development (Scenario D). The

scenario that saves the most money on infrastructure (identified in Exhibit 3) is Scenario C,

described as: "The focus of new development and growth on unused land would be walkable

and transit-oriented development. There would be more infill and redevelopment and investments would be made to extend public transit systems and alternatives to the automobile."35

9

Growing Toward More Efficient Water Use: Linking Development, Infrastructure, and Drinking Water Policies

2. Smart Growth Can Help Communities Reduce Costs and Conserve Water
Growing Toward More Efficient Water Use: Linking Development, Infrastructure, and Drinking Water Policies

10 2. Smart Growth Can Help Communities Reduce Costs and Conserve Water Residential Water Use - Gallons per Capita per Day

Average Residential Density - DU per Acre

190

230

210

170

150

130

110

90

70

50

1 2 45 3 68 7

Dave Eckhoff, PSOMAS Engineering

Source: Tim Watkins, Envision Utah, June 24, 2003

Approaches Baseline Quality

Growth

Quality

Growth

Savings

Water

Demand

• Changes in lot size

• Different allocation of population

and employment across area

• Use of conservation pricing

(although overall price of water 

did not change)

298 

gallons

per day

per capita

267 

gallons

per day

per capita

10.4%

Cost of

Infrastructure

• Reduced length of new pipes

required

• Expanded use of existing 

infrastructure through infill 

development

$2.629

billion 

(in 1999

dollars)

$2.087

billion 

(in 1999

dollars)

20.6%

EXHIBIT 2: Envision Utah Quality Growth Impacts

EXHIBIT 3: Per Capita Water Use Declines with Higher Densities

Per Capita Residential Water Use as a Function of Residential Density
Scenario C's density level also appears to be the most effective in reducing per capita water

demand. A study by Envision Utah demonstrated that per capita water demand in the GWA

decreases dramatically as development becomes more compact, from approximately 210

gallons per day at a density of two dwelling units per acre to roughly 110 gallons per day at

five dwelling units per acre (see Exhibit 3). 

Densities beyond five units per acre reduce per capita water demand somewhat, but the

water efficiency gains for increased densities are smaller. Although this curve may hold in

other areas, only an analysis based on local conditions can determine the level of density

where efficiency gains begin to taper off. Also, each community should determine for itself

whether to encourage higher densities that save even more water.

11

Growing Toward More Efficient Water Use: Linking Development, Infrastructure, and Drinking Water Policies

2. Smart Growth Can Help Communities Reduce Costs and Conserve Water
Growing Toward More Efficient Water Use: Linking Development, Infrastructure, and Drinking Water Policies

12 3. Policy Options to Better Manage Water Demand

3. Policy Options To Better Manage Water Demand

The previous parts of this paper have established that how a community grows affects its

water use and the cost of water. This part explores how water policies can affect growth. This

section identifies water policies that directly affect water use and cost and indirectly affect

growth patterns. Water policies that promote more efficient growth are likely to be doubly

effective in helping communities reach their water goals.

The policies discussed here offer a range of options to state and local governments and to utilities. Each policy is described, compared to conventional practice, and linked to community

efforts to create water-friendly development practices. Also included, where appropriate, are

issues to consider, practice tips, or case studies that can help implement the policy.

3.1 State governments

States indirectly influence local decisions on water rates and infrastructure in two ways.

First, states influence investment in water infrastructure through their administration of the

Safe Drinking Water and Clean Water State Revolving Funds (SDW SRF and CW SRF, respectively). States have more discretion under the CW SRF than under the SDW SRF. Under federal law,

EPA grants money to individual state funds based on a survey of their drinking water needs.

States, in turn, loan money to publicly and privately owned community water systems. Among

other functions, states select projects for funding and set interest rates for the revolving funds.

Revolving fund loans are made at below-market interest rates—sometimes at zero percent

interest—for projects to rehabilitate or replace a system's drinking water source; to consolidate with a stronger system; or to upgrade or replace treatment, storage, or transmission and

distribution facilities. From 1997 to 2001, EPA contributed $4.2 billion to the SDW SRF.36 States

matched this with $2.5 billion in state funds.37 Many states also have their own water infrastructure funding programs.

Second, states have broad authority over local planning and municipal finance. States also

have funds that are explicitly directed toward other goals, such as economic development and

affordable housing, but that also may be used on water infrastructure. State tax and municipal

finance laws govern the ability of localities to raise their own funds, for example, through tax

increment funding and local bond issues. Thus, state policies shape the options available to

local governments for reconciling water demand and growth.

3.1.1 Administer the state revolving funds to support smart growth 

Federal law establishes priorities for loans from the SDW SRF. Top priority must be given to 

projects that 1) address the most serious risk to human health, 2) are necessary to ensure compliance with safe drinking water standards, and 3) assist systems most in need on a per household basis. These priorities apply to all loan applications, regardless of whether the project 

contributes to more efficient growth or undermines it. However, states can use smart growth

criteria to distinguish among projects that rank equally on the three main priorities and give

preference to projects that meet other community goals. Projects that address deterioration in

older systems may meet the three main priorities as well as promote the "fix it first" policy discussed in section 3.1.2. 
13

Growing Toward More Efficient Water Use: Linking Development, Infrastructure, and Drinking Water Policies

3. Policy Options to Better Manage Water Demand

Both the SDW SRF and the CW SRF can support more efficient growth by purchasing undeveloped land or conservation easements on land to protect source water quality. Cleaner source

water reduces the cost of water treatment. One study has shown that a 10 percent loss of forest cover in a source watershed raises treatment costs by $8.80 per million gallons treated. The

increase in treatment cost is mainly due to the need for more chemical use in the treatment

process.38 Under the Safe Drinking Water Act, a state may set aside up to 10 percent of its

revolving fund for land conservation. As of 2003, only $2.7 million of SDW funds have been

used to protect less than 2,000 acres of land. 

The CW SRF provides more flexibility for states to conserve and restore land. In addition to the

preservation of undeveloped land, CW SRF funds may be used to clean up and reuse brownfields. Brownfield redevelopement projects not only reduce the risk of contaminating source

water, but also can focus growth on areas that are already served by existing water systems,

reducing pressure for system expansion. In 2004, the CW SRF loaned $180 million to projects

such as land preservation, brownfield renewal, reducing polluted runoff from agriculture, and

other activities. 

Case study

The state of Ohio uses CW SRF money to support its Water Pollution Control Loan Fund for

brownfield assessment and clean up. A $1.6 million loan covered the cost of treating contaminated subsurface soil and groundwater at a centrally located brownfield in Cleveland. This

loan helped Grant Realty to redevelop the site as its new corporate headquarters.39

Issues to consider

SRF program officers may need to be educated about the connection between SRF funding

and smart growth. Program officers may want to consider whether SRF funding has encouraged growth in areas where growth should be discouraged. They could then develop additional criteria for SRF loans that encourage infill and brownfield development as well as

improve water quality.40

3.1.2 Fix it first

Some states are looking for ways to direct growth to existing neighborhoods. Many older

neighborhoods or small towns have old infrastructure that may need substantial repair. While

some older systems have excess capacity, others may not have the capacity to serve new

growth, creating a serious barrier to private investment in infill areas. To address these concerns, state policy could favor repairing and upgrading existing systems over new construction. This "fix-it-first" philosophy is most often used for transportation investments—as, for

example, New Jersey and Michigan—but could easily be applied to water infrastructure. 

State funds powerfully influence how and where growth and development occur. Using these

resources to upgrade water infrastructure in existing urban areas reduces development pressure on the urban fringe, thereby preserving critical open space. Further, using state funds to

support new development in existing neighborhoods rather than new neighborhoods can

improve the efficiency of existing systems and reduce the quantity of water demanded.

Finally, the clear identification of priority funding areas can make the development process

more transparent and predictable for everyone.
Growing Toward More Efficient Water Use: Linking Development, Infrastructure, and Drinking Water Policies

14 3. Policy Options to Better Manage Water Demand

Case study

In its 2001 State Development and Redevelopment Plan, New Jersey classified areas within the

state as "areas for growth," "areas for limited growth," and "areas for conservation." These designations determine how future state investments in infrastructure and conservation are allocated.41 In a similar effort in Michigan, the bipartisan Land Use Leadership Council recommended that state funds be used to "support and encourage compact mixed-use development and infill while discouraging fragmentation and consumption of open space." The council's final report says: "State and federal infrastructure funding should be prioritized to support

existing developed areas [and] improve and maintain the effectiveness and integrity of existing infrastructure." The report also embraces the principle that "Infrastructure policies and

decisions support and encourage compact and mixed-use development and infill, while discouraging fragmentation and consumption of open space."42

Issues to consider

Partnerships are critical to ensure that all involved parties are educated about the policy and

how it supports the community's goals. States will need to educate the public about the

importance of repairing and upgrading existing systems and how "fix it first" can encourage

high-quality development. Elected officials need public support to effectively undertake

potentially contentious policy changes.

3.1.3 Authorize the formation of special districts to finance water system expansion

Local governments increasingly are looking to developers to pay more of the cost of expanding water systems to serve new developments. Localities, in turn, rely on state governments to

provide enabling legislation for these efforts. Some states have allowed local governments to

establish "limited-purpose governments" that finance infrastructure for new developments.

States can authorize local governments to designate areas within their jurisdictions as "special

districts" and to authorize in turn the developers of the districts to create limited-purpose governments to serve them. Special districts can issue bonds to fund infrastructure and impose

user fees, impact fees, and special assessments on property owners. These fees and assessments repay the bonds and pay for operation and maintenance. Special districts are subject to

local regulations, such as zoning, but are financially and administratively independent of the

local government. They can issue tax-free bonds, like local governments, but the bonds are

not backed by the local government and do not count against local debt limits. Local governments can create special districts just to provide water infrastructure and service, or they can

fund a much wider range of facilities, such as sewage, streets, parks, or schools.

This financing mechanism can shift infrastructure costs more directly onto the users of infrastructure. It can save the locality from tying up capital funds in system expansion, preserving

resources to upgrade and maintain existing systems. It can provide an alternative to impact

fees where impact fees either are not allowed or have proven difficult to assess or implement. 
15

Growing Toward More Efficient Water Use: Linking Development, Infrastructure, and Drinking Water Policies

3. Policy Options to Better Manage Water Demand

Case study

Several states have authorized special districts. California and Arizona call them

"Community Facilities Districts," and Florida calls them "Community Development Districts."

Since they were authorized in 1980, about 200 Community Development Districts have

been created in Florida. Supporters note that the districts generally have provided goodquality public facilities and services to their residents. They also have helped reduce political

battles over infrastructure costs. 

Issues to consider

Some of Florida's Community Development Districts have been accused of being unresponsive and undemocratic.43 State law allows developers to limit homeowners’ participation in

district decisionmaking for the first six years, and a few developers have retained control 

far longer.44 In at least one case, a developer has been accused of steering infrastructure

contracts to friends and relatives who have overcharged homeowners for their work.45

Homeowners also have charged that state and local officials have been lax in overseeing

the districts. 

Creating special districts fragments government in ways that can make coordination difficult. Special districts may raise the overall cost of public administration, since they establish

another local bureaucracy in addition to the existing general-purpose government. Finally,

allowing some community residents to essentially opt out of local government services can

reduce support for those governments and their ability to provide services to residents not

in special districts. 

3.1.4 Connect water and land use planning to provide predictability in the development process 

In most cases, different levels of government conduct land use planning and water planning.

Localities develop general plans that then become the basis for specific area plans, zoning

decisions, and building permits. Meanwhile, state water agencies develop integrated resource

plans that serve as the basis for water management plans, which are the basis for formal commitments to provide water service ("will serve" letters) and eventually water hookups for individual buildings.

Once development is in place, water agencies have had little choice but to serve it. In cases

where existing water supplies have run short, local officials have been forced to halt new

development until an adequate water supply can be ensured. In March 2001, Frederick,

Maryland, declared a moratorium on new development and annexations after discovering

that the city's water system could no longer support its growth. Frederick suffered water

shortages during a severe drought in 2002. In the fall of 2002, the city adopted a water allocation ordinance and in 2003 began to issue water allocations. Currently, developers must

secure a water allocation and sign a water service contract with the city before applying for a

building permit.46 These restrictions will remain in place until Frederick completes construction of a new water treatment plant. 
Growing Toward More Efficient Water Use: Linking Development, Infrastructure, and Drinking Water Policies

16 3. Policy Options to Better Manage Water Demand

Making development more predictable is a key principle of smart growth. Further, the better

that a community understands its future water availability and the best options to protect

water quality, the more likely it is to support a realistic and sustainable approach to growth

that minimizes demand, improves efficiency, and protects water quality and future supply.

Two recent laws in California attempt to make the development process more predictable by

better linking the land use and water planning processes. 

California's SB 610 requires water suppliers to estimate their projected water supply/demand

balance for jurisdictions served by their systems. Cities and counties are then required to consider this estimate before approving large-scale residential, commercial, and industrial developments. This law does not require cities and counties to reject developments that are inconsistent with the estimated water supply—it only requires that they take water into consideration when deciding whether to approve them. 

A second law, SB 221, requires water agencies or appropriate city or county jurisdictions to

verify an adequate water supply for developments before they issue building permits.47 This

review is required only for residential developments of 500 units or more, although infill projects and housing developments for low- and very low-income households are exempt.48

Incorporating "consistency provisions" into state planning statutes also can help ensure that

comprehensive land use plans are consistent with other local plans and regulations. While

several states, including Arizona, Connecticut, Florida, and Washington, require land use

plans to be consistent with each other, few have gone the additional step of specifically

requiring land use and water plans to be consistent. Both consistency provisions and the

new California laws can support community efforts to incorporate the water implications of

new growth into long-term planning and make the development approval process more

predictable.49

Case study

In 1990, the state of Washington adopted the Growth Management Act. Among the act's 13

goals are concurrency for public facilities and services, reduction of sprawl into rural areas, and

encouragement of development in urban areas. The act requires countywide planning policies

that designate urban growth areas and identify sites for county services. Local comprehensive

plans then address land use, utilities, capital facilities, transportation, and housing. Both the

policies and the plan must be implemented by development regulations, such as zoning, that

ensure concurrency and consistency with the urban growth areas. These planning activities

must also be consistent with local capital budget decisions. 

While it remains controversial, the Growth Management Act is credited with raising the profile

of water issues and with making local, water-infrastructure decisionmaking more transparent

and predictable.50

In the more arid Southwest, where water supplies are increasingly tight, New Mexico has

begun to require communities to have the water rights in place before they can build new

development. Previously, the state allowed communities to build first and secure the water

rights later.51
17

Growing Toward More Efficient Water Use: Linking Development, Infrastructure, and Drinking Water Policies

3. Policy Options to Better Manage Water Demand

Issues to consider

"Consistency" and "concurrency" requirements get mixed reviews. Requirements for transportation concurrency in Florida have been criticized as ineffective or counterproductive.

Transportation concurrency may have encouraged development in previously undeveloped

areas because these areas usually have excess road capacity. 

3.1.5 Clarify a utility’s “duty to serve”

Public utility law generally has held that "a public utility has a duty to serve all customers within its service area who can pay for the cost of service..."52 The duty to serve can, and at times

does, conflict with a utility's or community's efforts to control water costs and ensure adequate quantities for existing customers. In such cases, the duty to serve has traditionally

superseded other considerations, sometimes undermining other community goals, such as

orderly growth and long-term, stable water provision. 

Limited water supplies in many parts of the country, however, have led to a shift in legislation

and case law. California laws SB 221 and SB 610 (see Section 3.1.4) exemplify this shift,

enabling communities to control the timing and type of development in order to ensure an

adequate water supply. Recent legislation in Idaho and Arizona has also weakened the duty to

serve and strengthened localities' ability to plan for long-term, sustainable growth. Courts

have held that "a city should not be required to undermine its own growth management policy simply because it is a water supplier. Non-municipal suppliers should be subordinate to this

policy so long as the policy does not impair their constitutionally guaranteed fair rate of

return."53 Nevertheless, localities' duty to provide water often remains unclear. 

Clarifying state law on this subject is critical to localities' ability to plan for future growth with

confidence that they will not be undermined by claims for service to new development

beyond their desired boundaries. The growing maturity of this issue is also evidence of communities' recognition that the manner in which they grow has a direct and significant impact

on water and that their water policies have a direct effect on how they grow.

Case study

In 2003 the state of Washington passed the Municipal Water Supply—Efficiency Requirements

Act, which directed the state Department of Health to more closely align water planning with

local land use plans. The law specifically requires that water utilities' service areas must be consistent with "local land use plans, comprehensive plans, coordinated water system plans,

watershed plans, and development regulations."54 Since the duty to serve applies only within

a utility's service area, carefully delineating service areas that reflect land use plans helps to

minimize the conflict between land use and water provision. 

Issues to consider

Clarifying the relationship among (in some cases) 100-plus-year-old state water laws, complex

property law, and the legal authority of communities to plan for future growth is a complicated

task. In many places, local comprehensive plans are inconsistent with development regulations;

thus, linking water system plans with comprehensive plans could worsen conflicts between
Growing Toward More Efficient Water Use: Linking Development, Infrastructure, and Drinking Water Policies

18 3. Policy Options to Better Manage Water Demand

development and water provision. States considering following Washington's lead may wish to

provide additional planning assistance to localities. This assistance could be directed toward

improving consistency among local plans and their implementing codes and regulations,

among other goals. 

3.2 Local and regional governments

Municipalities have a powerful effect on system efficiency and the demand for and cost of

water. Municipalities that run water utilities affect water demand directly through their infrastructure and pricing policies. As has been discussed, these policies can directly influence

water use and development patterns, which in turn affect water use. Localities that wish to

ensure efficient water use can focus on system maintenance and set prices that reflect the true

cost of water delivery. These policies will encourage compact development that reduces the

cost of water delivery. Municipalities can further encourage compact development with zoning, subdivision regulations, infrastructure spending, tax incentives, and other land use policy

tools. In particular, local policies that encourage infill development can support states' and

utilities' "fix it first" policies, minimizing expensive new extensions. This, in turn, can reduce the

cost of water service and the overall demand for water. 

3.2.1 Integrate water budgeting into land use planning

As discussed in Sections 3.1.3 and 3.1.4, lack of coordination between land use planning and

water planning can frustrate a predictable development decision process. Regardless of how

the legal issues surrounding communities' duties to serve are resolved, municipalities can

reduce the risk of water shortages by creating water budgets that are based on water supply

assessments. 

Water planning at the state or regional level often is not detailed enough for communities

to match their water use to their water supply. A water budget can help a community to

better understand the locally available water resources and compare them to the water

demand. Seasonal shortfalls and long-term discrepancies between supply and demand can

prompt communities to implement conservation measures, such as xeriscaping, block pricing, or other efforts.

Establishing a water budget may involve appointing a broad-based advisory committee consisting of citizens, landowners and developers, local officials, and experts in water system

management. The advisory committee could collect data on water use and trends, identify

potential shortfalls, and recommend measures to better align water demand with anticipated

resources. The recommendations may provide local governments with guidance and support

for integrating demand-reducing measures into local land use plans, regulations, and incentive programs.55

The regional aspect of the supply and demand assessment also provides a solid basis for

actions that extend beyond local borders to coordinate how and where development takes
19

Growing Toward More Efficient Water Use: Linking Development, Infrastructure, and Drinking Water Policies

3. Policy Options to Better Manage Water Demand

place. Efforts to direct development to already-developed areas, and especially to compact,

central areas, can help to bring a region's water demand into better balance with its limited

supplies.

Case study

Albuquerque, New Mexico, recently passed a resolution to develop a regional water budget

that details its water "revenue" (supplies) and "expenditures" (uses). The water budget is part

of a larger effort within the region to re-examine its traditional approach to water. For

decades, Albuquerque had extracted water from an underground aquifer. Recent data, however, indicated that the aquifer was being "mined"—water was being withdrawn faster than it

was being replenished—and probably could not meet the community's water needs in the

future. The water budget will help the city to manage future water use to avoid deficits.56

3.2.2 Use private activity bonds strategically to finance upgrades in existing service

areas and planned growth areas 

Although some water systems may be able to expand while keeping up with maintenance

and replacement of existing pipes, many cannot without additional resources. EPA projects

that systems will face up to $205 billion in unfunded but necessary capital expenditures over

the next 20 years. 57, 58 One way local governments can finance these expenditures is by issuing private activity bonds. Such bonds can be a cost-effective way of financing needed water

system replacement or upgrades that will support infill development and relieve growth pressures outside the existing system.

Communities that decide to develop beyond their existing service areas can conserve 

financial resources by designating zones or tiers for development. They can delineate and prioritize areas where public funds, in conjunction with private activity bonds or other assistance,

will support infrastructure for new growth. Local governments may designate boundaries

beyond which no public funds will be available, leaving the cost of infrastructure wholly to

the private sector. 

In sum, these approaches help communities use public funds to encourage growth in targeted areas and reduce or eliminate subsidies for growth in areas where growth is not desirable.

Case study

Florida's Growth Policy Act recognizes infill development and redevelopment as important to

promoting and sustaining urban cores. Florida's definition of urban infill and redevelopment

areas includes those where public services, such as water and wastewater, transportation,

schools, and recreation, are already available or are scheduled to be provided within five years.

A local government with an adopted urban infill and redevelopment plan may issue revenue

bonds and employ tax increment financing to finance the plan. These urban infill and redevelopment areas have priority in the allocation of private activity bonds.59

Issues to consider

Drinking-water facilities generally are exempt under private activity bond regulations and

therefore are eligible for tax-exempt status. However, federally mandated caps limit the
Growing Toward More Efficient Water Use: Linking Development, Infrastructure, and Drinking Water Policies

20 3. Policy Options to Better Manage Water Demand

amount of tax-exempt private activity bonds that can be issued in a state. States can prioritize

bond allocation to support projects that implement smart growth strategies and upgrade

water infrastructure.

3.2.3 Introduce service availability fees to better capture the marginal cost of system

expansion and household water demand

Local governments can assess service availability fees (also known as exactions, impact fees,

service development fees, or facility charges) on a developer to cover the costs of existing

and/or future water infrastructure for new development. "Latecomer fees" also may be levied

on developments occurring within a reasonable period of time, such as 15 years, after a water

system is built. The local water utility may directly levy some service extension fees. A recent

study found that 77 percent of drinking water utilities recover some of the cost of service

extension through developer contributions.60

Service availability fees can reduce water cost and demand in two ways. First, communities

can offer full or partial fee waivers for growth in targeted neighborhoods already served by

existing infrastructure or for compact projects in undeveloped areas. Second, communities

can calculate fees for new construction in outlying areas that more closely approximate the

marginal costs of system expansion, rather than its average costs. Another way of assessing

fees is to establish zones in which fees are based on distance from existing facility centers.

Many fees are calculated as an average cost of existing system construction or use costs without regard to distance or location, rather than the true marginal cost of expanding a water system to a given project site. Fees that more accurately evaluate the cost of growth and development by location are as predictable for developers as average fees. Further, targeted

waivers or fee reductions can encourage development in existing neighborhoods or other

compactly designed areas.

Case study

Salt Lake City applies two sets of fees: one to infill sites within existing city lines and one to the

growing Northwest Quadrant area.61 San Antonio waives water and other fees in infill areas

the city has targeted for redevelopment. San Antonio also charges lower water rates to customers inside the city limits.62

Issues to consider 

Some communities have misused service availability fees by spending fee revenue on projects

that do not directly benefit the assessed development or to subsidize general revenue. These

practices are not allowed under most state laws and are vulnerable to court challenge.63

Because the developer will pass on at least a portion of the fees to the homebuyer, fees can raise

housing costs. Some cities have exempted or otherwise reduced fees on residences that qualify

as "affordable housing" according to the U.S. Department of Housing and Urban Development.
21

Growing Toward More Efficient Water Use: Linking Development, Infrastructure, and Drinking Water Policies

3. Policy Options to Better Manage Water Demand

3.2.4 Encourage natural landscaping in residential and commercial buildings

Large grass lawns are a basic feature of traditional landscaping for both homes and businesses. Homeowners' associations and neighborhood covenants often require grass or turf lawns;

commercial sites usually incorporate acres of grass. Constant watering and irrigation of these

lawns demand large amounts of water, particularly in arid climates. The sandy soils found in

arid areas do not hold water well, increasing water demand as commercial building managers

and homeowners struggle to maintain a green lawn.

Traditional landscaping is expensive as well as water-hungry. The Conservation Design Forum

has estimated that the initial cost of a traditional 10-acre corporate landscape would be 48

percent more than a "sustainable landscape" planted with native plants. Over the first 10 years

after installation, the traditional landscape would cost 52 percent more and, in later years, 82

percent more than a sustainable landscape. These estimates include the cost of additional

watering for the traditional landscape.64

Landscaping that uses native plants will require little additional water beyond what the local

climate provides once the plants are established. Xeriscaping explicitly seeks to conserve

water through landscaping in which "plants whose cultural requirements are appropriate to

the local climate are emphasized, and care is taken to avoid wasting water to evaporation and

run-off."65 Xeriscaping can reduce long-term water use for landscaping by 70 percent or

more.66 Some utilities, particularly those in the arid Southwest such as Tucson and Denver,

also offer their customers information on xeriscaping and its benefits.

Local governments can encourage natural landscaping by collaborating with homeowners'

associations, local landscapers, and other organizations to educate citizens. Localities could

provide financial incentives, such as property tax breaks, for commercial building managers

and homeowners who implement and maintain natural landscaping on their properties.

Finally, local and regional governments can lead by example by creating natural landscaping

demonstration projects on public grounds and parks.

Some local governments, primarily in arid regions, have adopted ordinances that require landscapers to use plants that are adapted to the local climate and need little or no additional water

after the plants are established. These ordinances restrict the use of turf, list plants that can be

used, or regulate the type of irrigation allowed. Some ordinances exempt single-family homes.67

Natural landscaping can foster distinctive communities with a sense of place by creating

neighborhoods with native plants and unique regional features. Rather than trying to emulate

the grassy yards of less arid regions, property owners in dry areas can reflect their natural surroundings and help create a visual identity for their communities.

Case study

Local governments and utilities are experimenting with incentives for less thirsty landscaping. Las Vegas pays homeowners one dollar for every square foot of turf removed. Denver’s

water board recently began a rebate program for homeowners who purchase trees and

shrubs with low water needs. The city of Denver launched a Community Conservation

Gardens Project that is planting parks with water-conserving landscapes. This project trains
Growing Toward More Efficient Water Use: Linking Development, Infrastructure, and Drinking Water Policies

22 3. Policy Options to Better Manage Water Demand

teens for work in the landscaping industry, creates beautiful public spaces in both prominent

and neglected parks, and serves as a model to homeowners and businesses.

Issues to consider

Natural landscaping and xeriscaping have met with resistance in some communities. Efforts to

educate communities about xeriscaping may conflict with entrenched attitudes about what

makes lawns, yards, and public places inviting and attractive. Some homeowners’ associations

have rules that force residents to plant thirsty, non-native grasses in arid areas.

3.3 Utilities

Water utilities play a major role in influencing water demand by setting the rates that determine how much customers pay for water. Many utilities find it difficult to determine fees that

capture true costs. Calculating the true cost of delivery for a household or business—the individual user's incremental cost increase to the system—is all but impossible in practice. On the

other hand, charging each user rates based on the average cost of serving all users can overcharge users who live in compact, central neighborhoods and can produce the subsidies discussed in Part 1. Furthermore, utilities face political pressure to keep rates low—so low, in fact,

that many utilities do not recover their full cost of doing business. Because water is such a

basic necessity, utilities also must address concerns that customers with low incomes may not

be able to afford rate increases, although poorer inner-city residents would benefit from lower

rates that more accurately reflect the lower cost of serving them. In the face of these challenges, utilities have developed a variety of pricing structures. Pricing can reinforce or undercut other policies that encourage compact development.

3.3.1 Fix it first

While states can target financial assistance in ways that encourage repairs and upgrades to

existing water networks, the utilities themselves ultimately decide which parts of their systems

receive priority for improvements or expansion. Utilities that implement fix-it-first policies can

improve their own financial situation, conserve water, and lower costs for their customers. Fixit-first policies can be especially effective when they are combined with fees for system expansion and local efforts toward redeveloping existing neighborhoods. 

Many utilities face declining rate bases as customers move from neighborhoods served by the

existing system to outlying areas. Utilities expand their systems to these new neighborhoods,

recapturing old customers. At this point, however, the utilities have to pay for building the

new systems as well as maintaining the old ones even though they may have roughly the

same number of customers. Utilities can recoup their investment and maintain their systems

through three mechanisms: they can raise rates on all customers; they can charge service

expansion fees to customers or developers in the new neighborhoods; or they can acquire

new customers in the old neighborhoods.

How utilities balance their spending among system repair, system replacement, and system

expansion and how they set rates and fees are important to their financial health. Utilities

often borrow money on the bond market to pay for their capital projects. The interest rate that
23

Growing Toward More Efficient Water Use: Linking Development, Infrastructure, and Drinking Water Policies

3. Policy Options to Better Manage Water Demand

a utility must pay is determined by the market's assessment of its management, and particularly the utility's management of its physical assets: treatment plants, pipes, and pumps. A fixit-first policy that stresses maintenance of existing physical assets can contribute to higher

bond ratings, lower borrowing costs, and lower overall costs for water delivery. 

Moody's Investors Service is one of three major credit-rating agencies that rate bonds and

strongly influence utilities' borrowing costs. While some of Moody's key rating factors are

clearly beyond utility managers' control—the health of the local economy, for example, or customer income—other rating factors evaluate utility management policies. "Maintenance of

assets" is a key rating factor. Moody's also grades utilities on their "strategic focus" and on

"regulatory compliance," which indirectly support fix-it-first policies, since compliance and

focus are related to the health of the existing system and its orderly expansion.69

A recent analysis by Public Financial Management also emphasizes the importance of the fixit-first policy. It states: "A particular challenge of water and wastewater systems is their ability

to meet capital investment requirements of aging systems, and their success in doing so is

scrutinized by credit rating agencies." The analysis noted that credit-rating agencies also

rewarded utility management strategies that combined fix-it-first policies with fees that

assessed new users—rather than all users—for the cost of system expansion.70

Case study

Philadelphia's water department is one of the oldest water utilities in the country. Like many

older cities, Philadelphia has an aging water system, declining population in its central service

areas, and increasing demand in suburban areas. In the early 1990s, Standard and Poor's (S&P)

noted that parts of the system were more than 100 years old and needed "extensive repair

and replacement." In 1991, the water department had a deficit of $42.5 million on an operating budget of $270.4 million.71

The water department made several financial and administrative improvements over the rest

of the 1990s. It created a rate stabilization fund dedicated to capital expenses and vastly

improved metering and bill collection. In 1996, the city created a Capital Program Office to

track the condition of infrastructure and planning and to manage capital improvements. The

system's bond rating improved along with its capital and operational reforms, saving the city

millions of dollars in interest. By 2001, the water department's bonds had been upgraded to

"A-" (S&P) and "A3" (Moody's). Both services highlighted the department's capital improvement program for reconstructing its water conveyance system and improving its water treatment plants.72

The Philadelphia Water Department also takes a proactive approach to protecting the quality of

its drinking water sources. It helped to develop a watershed land protection collaborative for

the Schuylkill River that works to preserve natural lands that have high value for water quality.73

Issues to consider

Utilities that are faced with declining customer bases along with increasing repair and replacement costs find it very difficult to maintain their systems even with a fix-it-first policy. Local

governments can help these utilities by targeting growth to areas on the existing system.
Growing Toward More Efficient Water Use: Linking Development, Infrastructure, and Drinking Water Policies

24 3. Policy Options to Better Manage Water Demand

Utilities can focus system upgrades in the targeted areas to make them more attractive to new

development. When that development occurs, the increase in customers will generate new

revenue that often pays both for the targeted upgrades and for other improvements to the

existing system. This can generate an upward spiral of system improvement supporting redevelopment that funds further system improvement. 

3.3.2 Set rates that fully cover costs

A recent GAO report found that over one-quarter of public utilities charge rates that do not

cover the full cost of water service, including depreciation, debt

service, taxes, and operations and maintenance.74 These artificially

low rates encourage customers to use more water than they would

if they paid full price. Inadequate rates also contribute to the gap

that exists in many systems between available funds and the cost

of needed repairs and replacement. 

Water utilities may be publicly or privately owned. Public water utilities generally calculate rates differently than investor-owned utilities. Public water utilities

often use the "cash needs" approach, which considers operation and maintenance expenses,

tax equivalents (e.g., payments in lieu of taxes), debt-service payments (including both interest

charges and repayment of principal), contributions to specified reserves, and capital expenditures not financed by either debt or contributions. Private and investor-owned utilities more

commonly use the "utility" approach, which considers operation and maintenance expenses,

taxes, depreciation, and a rate of return on the value of the utilities' assets less accumulated

depreciation.75 The utility approach is more likely to generate adequate revenue, in part

because it explicitly considers the utility's cost of capital and the cost of depreciation. Public

authorities may wish to consider the utility approach. However, neither approach will result in

adequate revenue unless maintenance and system replacement needs are carefully assessed. 

Unrealistically low water rates undermine efforts and incentives to reduce water use by all

users. Those who use little water receive a small subsidy, while those who use large amounts

of water receive larger subsidies. This encourages water-consumptive growth patterns and

deprives those who choose less water-consumptive lifestyles of the full benefits of their

choice. In fact, customers who use less water may be charged for the cost for new drinking

water supplies that would not be needed if water were priced correctly. 

Case study

A 2003 water-pricing study by an advisory committee in Fort Worth, Texas, found that rates

were failing to cover increasing costs of electricity, security, environmental compliance, and

pipe replacement. Residential users were paying nearly 8 percent less than the cost of their

water consumption, and commercial users were underpaying by more than 5 percent. In

response, the Fort Worth Water Department raised rates and changed its rate structure to

encourage conservation.76 The rate structure is discussed further in the case study for the next

section, 3.3.3. 

Over one-quarter

of municipalities

charge water rates

that do not cover

their costs.
25

Growing Toward More Efficient Water Use: Linking Development, Infrastructure, and Drinking Water Policies

3. Policy Options to Better Manage Water Demand

Issues to consider

For public water utilities, changes may require the approval of a board of directors, composed

in part of elected officials. In private investor-owned water utilities, rate changes are subject to

approval by the state public utilities commission (or public services commission). In some

cases, utilities may be subject to legislation or other regulation that limits the amount, 

frequency, and type of fee increases.

3.3.3 Implement conservation pricing 

Consumers pay for water in two ways: hookup (connection) fees and volume charges.77 A connection fee may be a flat rate, vary by type of unit added to the system, or vary by the size of

meter used for the new unit. Typically, residential connection fees vary with the size of the

meter. Some systems use a more complex calculation, varying fees by lot size, value of the

property, or distance from the treatment station.

Volume charges ("rates") can be uniform—the same amount for each gallon used—or can

employ "block pricing" under which rates vary with water consumption. When used to promote conservation, this practice—also known as conservation pricing or incremental pricing—increases water rates for higher levels of water use. Base amounts sufficient to meet

basic household needs are assessed at the lowest per unit rate. Additional blocks (e.g., the

next 5,000 gallons consumed) of water consumed are charged at incrementally higher rates.

Similar efforts apply surcharges for use beyond a base amount in times when demand is

greatest and supply is lowest; seasonal or drought-impacted charges are two examples. Peak

charges encourage conservation, especially for uses such as lawn watering, when conservation is most needed. According to a 2002 survey of 153 systems, 36 percent of the systems

charged uniform rates, 30 percent charged declining block rates, and 30 percent charged

increasing block rates.78 Thus, less than one-third of water utilities surveyed use rate structures

that encourage conservation.

Water rate structures that charge less for higher levels of consumption encourage more water

use and more water-consumptive development patterns. Like the artificially low water rates

discussed above, discounts for high water use not only penalize users who live in water-efficient neighborhoods, but also increase the likelihood that those users will eventually have to

pay for new water supplies and new water plants.

Case study

In February 2004, the Fort Worth Water Department raised rates to cover increasing costs. Rate

hikes were higher for households that consumed the most water. Under the new rates, customers using less than 1,000 cubic feet per month pay $1.66 per 100 cubic feet, those using

between 1,000 and 3,000 cubic feet pay $1.98 per 100 cubic feet, and households using more

than 3,000 cubic feet pay $2.40 per 100 cubic feet. The average household in Fort Worth consumes about 12,000 cubic feet per year.79 Following the rate hike, in July 2004, city-wide water

consumption was 11 percent less than the average of the previous four years.80
Growing Toward More Efficient Water Use: Linking Development, Infrastructure, and Drinking Water Policies

26 3. Policy Options to Better Manage Water Demand

Issues to consider

Commercial customers are accustomed to discounts for volume and may perceive conservation pricing as a threat to economic development. Conservation pricing could generate higher

costs that unduly burden low-income households. Utilities can protect against this by ensuring that the base block quantity is adequate to meet basic household needs and that higher

fees are levied on amounts necessary only for more discretionary purposes. 

From the utility perspective, block rates can make revenue less stable than uniform pricing

systems, and their success at encouraging water conservation can vary. Studies have shown

that, without other conservation measures or overall rate hikes, conservation pricing reduces

water demand by 5 to 8 percent or more.81

Finally, the political nature of rate increases makes it a potentially difficult issue for many utilities. Public education and outreach82 or citizens' advisory committees that coordinate

research and offer recommendations83 can mitigate this challenge.

3.3.4 Implement zone pricing for water users

Typical water-pricing structures spread costs evenly among all customers without regard to the

actual price of delivering water to them. A 1995 Rutgers study on New Jersey infrastructure estimated that the cost of providing water to households in dispersed developments was roughly

13 percent higher than the cost of doing so in a more compact area.84 Elevation, as well as distance from the water plant affects the cost of pumping water to a user. Yet, as already discussed,

most utilities charge uniform rates, regardless of the higher cost of serving dispersed development, developments at higher altitudes, and large-lot developments. Utilities can set up rate

structures wherein customers in lower-cost areas pay less for water than those in higher-cost

areas. Such rates more accurately reflect the additional costs of pumping treated water to distant

locations or to higher elevations. 

Some utilities set lower rates for customers inside city limits, but this discount usually is not

based on the difference in cost of service. These lower rates are intended to compensate city

residents whose tax revenues support subsidies given by their city governments to the utilities. Zone pricing goes further by tying the price of water more explicitly to the cost of delivering water to the zone and the cost of maintaining the system infrastructure that serves the

zone. It may consider factors such as density, distance from treatment center, and elevation to

better reflect the cost-effectiveness of water delivery in compact, centrally located neighborhoods. Zone-based costs may also better capture utility expenditures on system upgrades and

expansion in the absence of adequate hookup fees. 

By setting up rates to reflect the true cost benefits of water conveyance and operation and

maintenance, utilities can help encourage development that uses less water and is more efficient to serve. Further, zone pricing helps to make individual users responsible for the cost of
27

Growing Toward More Efficient Water Use: Linking Development, Infrastructure, and Drinking Water Policies

3. Policy Options to Better Manage Water Demand

serving them, ensuring that those who impose lower costs on the system receive the benefit

of lower prices.

Case study

The Cleveland Division of Water (CDOW), the regional water purveyor for most of the

Cleveland area, is one of the few systems in the United States that employs spatially variable

user rates. This system recovers costs from pumping to higher elevations, which happen to

correspond to areas of less density and more dispersed development. Customers located in

CDOW’s three higher-pressure zones pay rates that are 1.7, 2.0, and 2.3 times greater than

those in the lowest pressure zone. On average, residents outside of the city (but inside the

CDOW service area) pay approximately twice as much as city residents for their water.

Although intended to cover extra operating costs, this ratio also corresponds closely to

CDOW’s expenditures for capital improvements: 65 percent of all CDOW capital improvement

dollars funded projects outside the city, while 35 percent were spent in the city—a ratio of

nearly two to one.85

Issues to consider

Some water users may perceive zone pricing as unfair, while others may perceive the current

pricing system as unfair. Utilities may want to educate consumers about the relationship of

costs to the new prices. 

3.3.5 Engage a citizens’ advisory committee on water

Local resident and stakeholder involvement in developing strategies to address water issues

can be effective in tackling current problems and preempting future ones. Collecting and considering the opinions, concerns, and needs of utility customers can better inform plans to

service future growth and development. Involving citizens in the discussion of tradeoffs

between options improve their understanding and reduce chances of litigation over final

decisions. 

A citizens’ advisory committee (CAC) is usually made up of representatives of the community

and selected expert groups. CACs meet regularly, developing trust as well as knowledge of the

issues. These groups can effectively represent customer needs and concerns and are useful in

addressing potential conflicts in the community. Citizen involvement can not only help identify opportunities to reduce water demand or make existing systems more efficient, it can also

lead to stronger stakeholder involvement in related development decisions, thereby enlisting

residents in determining their community’s future.

Many communities already have organizations that are developing plans to protect sources of

drinking water. These groups are often broadly based, including local officials and watershed

associations as well as citizens. They may provide a useful forum for addressing water demand

and growth issues.

Case study

In Boston, a citizen “watchdog” group was formed during the late 1970s in response to concerns

about expanding the water supply and was later financially supported by the water 
utility district. Instead of promoting additional sources for Boston’s water supply, the citizen

group helped lead a conservation effort that focused on finding and fixing leaks. Due to this and

other conservation measures (e.g., customers received free water-saving devices, and the utility

increased water rates), water demand dropped by 16 percent between 1985 and 1992. The

Boston experience was "orderly, constructive, and economical, albeit very time-consuming."86

Issues to consider

Despite their benefits, CACs can be, as mentioned above, time-consuming and challenging to

manage. Participants must be sure that their involvement is taken seriously and will be used

constructively to shape project goals and outcomes, particularly since they often are uncompensated. Advisory groups must be on guard for citizens who come to the table with an

explicit agenda that could undermine the group's larger goals and efforts to create consensus,

cooperation, and compromise. Finally, substantial time and resources may be needed to support the group. 

Growing Toward More Efficient Water Use: Linking Development, Infrastructure, and Drinking Water Policies

28 3. Policy Options to Better Manage Water Demand
29

Growing Toward More Efficient Water Use: Linking Development, Infrastructure, and Drinking Water Policies

End Notes

End Notes

1 U.S. Environmental Protection Agency. 2002. “The Clean Water and Drinking Water

Infrastructure Gap Analysis.” EPA-816-R-02-020. September.

2 Boyd, Charles W., Chairman of the Water Service Committee, City of Frederick. 2004. 

“Got Water?” Presentation to the 7th Annual Southeast Watershed Roundtable, Nashville,

Tennessee. October 30.

3 City of Frederick. 2005. “Water and Sewer Allocation Master List Update” (November 21,

2005). <http://www.cityoffrederick.com/PublicInfo/PressReleases/2005/november/

11-21-waterlistupdate.htm>. Accessed November 30, 2005.

4 Michigan Land Use Institute. 2005. “Water Works: Growing Michigan’s Great Lakes

Opportunities.” Page 6. <http://www.mlui.org/downloads/waterworks.pdf>. Accessed

November 30, 2005.

5 International City/County Management Association. “Source Water Protection: Plain and

Simple” <http://www.lgean.org/documents/intro.pdf>.

6 U.S. Geological Survey. 1995. “Estimated Use of Water in the United States in 1995.”

Circular 1200, Chapter 6: Trends. <http://water.usgs.gov/watuse/pdf1995/html>.

Accessed September 12, 2002. 

7 U.S. Geological Survey. 2004, 2005. “Estimated Use of Water in the United States in 2000.”

Circular 1268. <http://pubs.usgs.gov/circ/2004/circ1268/htdocs/text-trends.html>.

Accessed November 30, 2005.

8 Frey, William H. 2005. “Metro America in the New Century: Metropolitan and Central City

Shifts Since 2000.”Washington, DC: Brookings Institution.

<http://www.brookings.edu/metro/pubs/20050906_metroamerica.pdf>. Accessed

September 16, 2005.

9 U.S. Geological Survey. 2004, 2005 op. cit. Calculations are the author's, based on Table 5,

“Public supply water withdrawals.”

10 Lubick, Naomi. 2004. “Western Aquifers Under Stress.” Geotimes. 

<http://www.geotimes.org/may04/feature_westernaq.html>. 

Accessed September 16, 2005.

11 Revkin, Andrew C. 2002. “Beyond a Drought, Water Worries Grow.” New York Times,

February 24.

12 National Oceanic and Atmospheric Administration. 2002. Drought data from the

National Climatic Data Center, Asheville, NC.

<http://lwf.ncdc.noaa.gov/oa/climate/research/drought/drought.html>.

13 American Water Works Association. 2004. Fact sheets. <http://www.awwa.org/

pressroom>. Accessed August 4, 2004.
Growing Toward More Efficient Water Use: Linking Development, Infrastructure, and Drinking Water Policies

30 End Notes

14 Ibid.

15 U.S. Geological Survey. National Handbook of Recommended Methods for Water Data

Acquisition. <http://water.usgs.gov/pubs/chapter11/chapter11E.html>.

16 Minnesota Department of Agriculture. 1997. “Master Gardener Survey Results: October

9, 1997; Homeowner Lawn Care Survey Results.” Cited in Purdue Pesticide Programs. The

Label, April 1998, p. 3.

17 Eckhoff, Dave. 2003. “Per Capita Residential Water Use as a Function of Density”

PowerPoint slide, provided to author by Tim Watkins of Envision Utah, June 24, 2003.

18 Natural Resources Defense Council. 2000. “Environmental Characteristics of Smart

Growth Neighborhoods.” <http://www.nrdc.org/cities/smartGrowth/char/charinx.asp>.

19 Sakrison, Rodney G. 1997. Water Use in Compact Communities: The Effect of New

Urbanism, Growth Management and Conservation Measures on Residential Water

Demands. Summary of doctoral dissertation for the Department of Urban Design and

Planning, College of Architecture and Planning, University of Washington, Seattle,

Washington.

20 Speir, Cameron, and Kurt Stephenson. 2002. “Does Sprawl Cost Us All? Isolating the

Effects of Housing Patterns on Public Water and Sewer Costs.” Journal of the American

Planning Association 68(1): 56-70.

21 Levin, Ronnie B., Paul R. Epstein, Tim E. Ford, Winston Harrington, Erik Olson, and Eric G.

Reichard. 2002. “U.S. Drinking Water Challenges in the Twenty-First Century.”

Environmental Health Perspectives 110(suppl 1): 43-52. See press release at

<http://www.win-water.org/win_news/021402article.html>.

22 Total freshwater consumptive use in 1995 was about 100,000 million gallons per day

(U.S. Geological Survey, 1995).

23 International Water Supply Association. 1991. Cited at

<http://www.nrc.ca/irc/leak/leakdetect.html>.

24 Kenny, Joan. 1999. “Water Loss Determination: For What It’s Worth.”The Kansas Lifeline.

July. <http://ks.water.usgs.gov/Kansas/pubs/reports/water.loss.html>. Accessed

September 12, 2002.

25 Cast iron pipes have an average life expectancy of 120 years, pipes laid in the 1920s

have an average life expectancy of 100 years, and pipes laid after WWII may only last 75

years. (American Water Works Association. 2001. Dawn of the Replacement Era:

Reinvesting in Drinking Water Infrastructure. p. 17.)

26 American Water Works Association. 2001. Dawn of the Replacement Era: Reinvesting in

Drinking Water Infrastructure. p. 17.

27 General Accounting Office. 2002. “EPA, GAO Examine Water Industry.” 2002. Wasteworld.

November. <http://www.win-water.org/win_news/1102article.html>. 

28 Ibid.
31

Growing Toward More Efficient Water Use: Linking Development, Infrastructure, and Drinking Water Policies

End Notes

29 Natural Resources Defense Council. 1998. Another Cost of Sprawl: Effects of Land Use on

Wastewater Utility Costs. <http://www.nrdc.org/cities/smartGrowth/cost/costinx.asp>.

30 Office of Technology Assessment. 1995. The Technological Reshaping of Metropolitan

America. OTA-ETI-643.

31 Fluvanna County, Virginia. 2000. Comprehensive Plan 2000. Chapter 8, “Infrastructure.”

<http://www.co.fluvanna.va.us/compplan/contents.htm>. Accessed September 11, 2003.

32 Burchell, Robert W., et al. 2002. Costs of Sprawl-2000. Transportation Cooperative

Research Program Report 74. Washington, National Research Council. p. 222.

33 Speir, Cameron, and Kurt Stephenson. 2002. “Does Sprawl Cost Us All? Isolating the

Effects of Housing Patterns on Public Water and Sewer Costs.” Journal of the American

Planning Association 68(1): 56-70.

34 Maryland Department of the Environment. 2002. Water Supply Financial Assistance

Program. <http://www.mde.state.md.us/environment/sm_grwth/wsassist.html>.

35 Envision Utah. “Phase II: Scenario Development.” <http://www.envisionutah.org>.

Accessed June 24, 2003.

36 U.S. Environmental Protection Agency. 2003. The Drinking Water State Revolving Fund

Program: Financing America’s Drinking Water From the Source to the Tap, a Report to

Congress. May. <http://www.epa.gov/safewater/dwsrf/pdfs/

dwsrf_congressreport-main.pdf>.

37 Ibid.

38 Trust for Public Land. 2004. “Protecting the Source.” p. 22.

39 Norfleet, Tracy. 2002. “Using the Clean Water Revolving Fund for Brownfields and

USTfields.”Washington, DC: Northeast-Midwest Institute. pp. 7-8.

<http://www.nemw.org/CleanWaterBF.pdf>. Accessed December 2, 2005.

40 U.S. Environmental Protection Agency. 2004. “Protecting Water Resources with Smart

Growth.” EPA 231-R-04-002. May. p. 39. <http://www.epa.gov/smartgrowth/pdf/

waterresources_with_sg.pdf>. Accessed December 3, 2004.

41 New Jersey Department of Community Affairs. “New Jersey State Development and

Redevelopment Plan.” <http://www.nj.gov/dca/osg/plan/index.shtml>. Accessed on

September 29, 2003. 

42 Michigan Land Use Leadership Council. 2003. Michigan's Land, Michigan’s Future.

August. <http://www.michiganlanduse.org/mlulc_chp7.pdf>. Accessed October 4, 2004.

43 From a classroom presentation by Professor Timothy S. Chapin, Florida State University

Department of Urban and Regional Planning, fall 2003.

<http://garnet.acns.fsu.edu/~tchapin/>. Accessed November 9, 2004.

44 Van Sickler, Michael. 2004. “His Empire on the Lake.” St. Petersburg Times. September 20.

<http://www.ccfj.net/CDDempire.html>. Accessed March 16, 2005.
Growing Toward More Efficient Water Use: Linking Development, Infrastructure, and Drinking Water Policies

32 End Notes

45 Ibid.

46 Boyd, Charles W., Chairman of the Water Service Committee, City of Frederick. 2004.

Presentation to the 7th Annual Southeast Watershed Roundtable, Nashville, Tennessee.

October 28.

47 The Metropolitan Water District of Southern California has prepared a study of water

supply and demand in southern California, to guide local communities and utilities in

determining their ability to accommodate the water needs of new growth. The study,

Report on Metropolitan’s Water Supplies, can be viewed at

<http://www.mwd.dst.ca.us/mwdh2o/pdf/sb221/sb221.pdf>.

48 Kanouse, Randele. 2002. “Show Me the Water: Quenching California’s Growing Thirst.”

February. <http://www.kmtg.com/pdfs/EBMUDSlidePres.pdf>.

49 Tarlock, A. Dan, and Lora A. Lucero. 2002. “Connecting Land, Water, and Growth.” Land

Use Law & Zoning Digest, American Planning Association. April.

50 State of Washington Department of Community, Trade and Economic Environment.

“What Is a Comprehensive Plan?”

<http://www.cted.wa.gov/DesktopDefault.aspx?tabid=485&tabindex=61>. Accessed

March 10, 2004.

51 Neary, Ben. 2001. “State engineer issues landmark water decision.”The New Mexican.

October 18.

52 Tarlock, Dan. 1998. “Water Supply as New Growth Management Tool.” Land Use Law.

November.

53 Tarlock, A. Dan. 2000. “Contested Landscapes and Local Voice.”Washington University

Journal of Law and Policy. Evolving Voices in Land Use Law: A Festschrift in Honor of

Daniel R. Mandelker. pp. 513-537.

<http://www.law.wustl.edu/journal/3/pg513to537.pdf>. Accessed October 1, 2003.

54 Washington State Department of Health, Office of Drinking Water. 2004. “Municipal

Water Law Interim Planning Guidance for Water System Plan/Small Water System

Management Program Approvals.” Revised March 2004. Attachment 6.

<http://www.doh.wa.gov/ehp/dw/Publications/

mwl-revised_interim_direction-finaljpr_end.pdf>. Accessed November 15, 2005.

55 Susquehanna River Basin Commission. 2003. “Analyzing the Availability of Water in

Northern Lancaster County.” March. <http://www.srbc.net/docs/Lancaster Study (Mar 03)

pdf.pdf>. Accessed October 15, 2003.

56 Griego, Eric. 2003. “City Aims to Protect Aquifer.” Editorial. Albuquerque Journal. April 5.

57 U.S. Environmental Protection Agency. 2004. “Protecting Water Resources with Smart

Growth.” EPA 231-R-04-002. May. <http://www.epa.gov/smartgrowth/pdf/

waterresources_with_sg.pdf>. Accessed December 3, 2004.
33

Growing Toward More Efficient Water Use: Linking Development, Infrastructure, and Drinking Water Policies

End Notes

58 U.S. Environmental Protection Agency. 2002. “The Clean Water and Drinking Water

Infrastructure Gap Analysis.” EPA-816-R-02-020. September.

59 South Florida Community Development Coalition. “Florida Tax Increment Financing

Districts.” <http://www.floridacdc.org/policy/tif2.htm>. Accessed December 3, 2004.

60 Raftelis Financial Consulting, PA. 2002. Raftelis Financial Consulting 2002 Water and

Wastewater Rate Survey. Charlotte, NC: Raftelis Financial Consulting, PA.

61 City Council of Salt Lake City. 2000. “An Ordinance Amending Chapter 18.98 of the Salt

Lake City Code, Relating to Impact Fees.”

<http://www.ulct.org/ULCTLeg.nsf/b388d79d2de086f787256ddd007e2565/

91668b366ed4ae52872570b70045c14d?OpenDocument>. Accessed October 18, 2004.

62 City of Antonio City Council. 2001. “City Council Adopts New Impact Fees: Executive

Summary.” <http://www.saws.org/business_center/developer/

impactfees/impactfees.pdf>. Accessed December 6, 2004. 

63 Bartlett, Phil. 2003. “Maine Superior Court Rules on Impact Fee” Gorham Times. October

10. <http://www.gorhamtimes.com/maine_superior_court_rules_on_im.htm>.

64 Conservation Design Forum. “A Comparison Of Sustainable and Traditional Landscapes.”

<http://www.cdfinc.com/CDF_Resources/Sustainable_Landscape_Cost_Comparison.pdf>.

Accessed March 11, 2004.

65 Wikipedia contributors. “Xeriscaping.”Wikipedia, the Free Encyclopedia.

<http://www.wikipedia.org/wiki/Xeriscaping>. Accessed October 15, 2003.

66 Xeriscape Colorado!, Inc. <http://www.xeriscape.org>. Accessed March 12, 2004.

67 Anderson, Kristin M. 2004. An Investigation into What Planning Departments and Water

Authorities Can Learn from Eleven Communities’Waterwise Landscaping Ordinances.

Unpublished terminal project, Department of Planning, Public Policy & Management of

the University of Oregon. Eugene, OR.

68 City of Denver press release “Mayor Hickenlooper Launches Community Conservation

Gardens Project,” June 8, 2005. Available at <http://www.denvergov.org/SDIMO/2049

press1738.asp>.

69 Westerman, Nicole, Dean Kaplan, and Michael Nadol. 2003. “Wall Street Bond Rating

Perspectives on Capital Program Best Practices.” American Water Works Association Joint

Management Conference. <http://www.awwa.org/CorePage.cfm?CI=5>.

70 Ibid.

71 Haarmeyer, David. 1992. “Privatizing Infrastructure: Options for Municipal Water Supply

Systems.” PS Number 151: Reason Public Policy Institute. October.

<http://www.rppi.org/ps151.html#03>. Accessed December 3, 2004. 

72 City of Philadelphia Water Department. 2001. “Standard & Poor’s, Moody's upgrade city’s

water and wastewater revenue bonds.” Press release. November 11.

<http://www.phila.gov/water/pr/pr011110.htm>. Accessed December 3, 2004. 
73 Trust for Public Land. 2005. “Path to Protection: Ten Strategies for Successful Source

Water Protection.”

74 General Accounting Office. 2002. Water Infrastructure: Information on Financing, Capital,

Planning and Privatization. August. <http://www.gao.gov/new.items/d02764.pdf>.

Summary available at <http://www.win-water.org/win_news/1102article.html>.

75 Ibid.

76 Lee, Mike. 2004. “Fort Worth Water Bills to Increase in February.” Fort Worth Star-Telegram

(Metro section). January 1. p. 2B.

77 Consumers also pay indirectly for water and other municipal services through general

taxes. These charges, however, often do not include household type or water consumption in their calculation of taxes due.

78 Raftelis Financial Consulting, PA, 2002.

79 Lee, 2004. 

80 Calculated from data from the Fort Worth Water Department Web site.

<http://www.fortworthgov.org/water/waterflows/monthwtrusage.htm>. Accessed

March 16, 2005. 

81 Stallworth, Holly. 2000. “Conservation Pricing of Water and Wastewater” April 10.

<http://www.epa.gov/owm/water-efficiency/water7.pdf>.

82 An EPA publication, “Building Support for Increasing User Fees” (1989), 

is available to support communities in this process:

<http://www.epa.gov/clariton/clhtml/pubtitle.html>.

83 Stallworth, 2000.

84 Burchell, R.W., and D. Listokin. 1995. “Land, Infrastructure, Housing Costs and Fiscal

Impacts Associated with Growth: The Literature on the Impacts of Sprawl Versus

Managed Growth.” Center for Urban Policy Research, Rutgers University. As summarized

in The Technological Reshaping of Metropolitan America, Office of Technology

Assessment. OTA-ETI-643.

85 Natural Resources Defense Council. 1998. Another Cost of Sprawl: Effects of Land Use on

Wastewater Utility Costs. <http://www.nrdc.org/cities/smartGrowth/cost/costinx.asp>.

86 Platt, Rutherford H. 1995. “The 2020 Water Supply Study for Metropolitan Boston: 

The Demise of Diversion.” Journal of the American Planning Association 61(2): 186. 

For more information on the Boston example see <http://www.mwra.state.ma.us/02org/

html/ wscac.htm>.

Growing Toward More Efficient Water Use: Linking Development, Infrastructure, and Drinking Water Policies

34 End Notes
United States 

Environmental Protection Agency

(1807-T)

Washington, DC 20460

Official Business

Penalty for Private Use $300

EPA 230-R-06-001

January 2006

www.epa.gov/smartgrowth

Recycled/Recyclable--Printed with vegetable oil based inks on 100% postconsumer, process chlorine free recycled paper.