Drinking Water and Affordability Information for States on Developing Affordability Criteria for Drinking Water 2. Drinking Water and Affordability One of the central challenges of modern environmental management is the provision of safe drinking water at an affordable price to citizens. Consumers generally pay far less for water services than for energy and telecommunication services, although available statistics may mask water costs for customers who pay through taxes or rent.
Water prices are primarily a function of water costs.
Factors that increase water costs include compliance with drinking water standards, replacing and improving the water delivery infrastructure, and meeting demand growth. Costs associated with meeting demand growth should be recovered through a fair capacity charge plan under which users benefitting from the increased capacity pay for it. Debt costs associated with financing projects over time also put pressure on rates. Another factor that can play a significant role in contemporary rate increases is historic underpricing. For some water systems, the loss of subsidies and the need to begin pricing water more accurately to reflect costs can account for substantial, but necessary, rate increases.