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Water efficiency has been broadly described to include both demand‐side management (conservation programs and incentives) and supply‐side management (utility leak detection and repair programs and water recycling). The logic of efficiency that applies to all of these practices is explored and a framework is offered for organizing information about water‐use efficiency. Utilities seeking to plan, design, and implement a successful water efficiency program have often struggled to sort out the costs and benefits that define efficiency, especially with regard to the varying perspectives of the utility, program participants, and society. In addition to providing a hands‐on approach to defining water efficiency and analyzing costs and benefits, the article spotlights the practical tools that evolved from the research project.

Contrary to many water customers’ beliefs, implementing efficient water rates, efficient plumbing, and conservation initiatives actually reduces the cost burden on water customers.

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