Water pricing and affordability in the US: public vs. private ownership

Abstract

We examined the 500 largest community water systems in the US to explore whether ownership is related to annual water bills, and the percent of income that low-income households spend on water. Regression results show that, among the largest water systems, private ownership is related to higher water prices and less affordability for low-income families. In states with regulations favorable to private providers, water utilities charge even higher prices. Affordability issues are more severe in communities with higher poverty and older infrastructure. Water policy needs to address ownership and regulation and explore new mechanisms to ensure water affordability for low-income residents.

Keep your head above water: Explaining disparities in local drinking water bills

“…Our use of a cross-state sample of systems with available billing data complements work by Teodoro and Saywitz, who report trends in drinking water and sewer affordability based on a nationally-representative sample of household water bills, and additional work in certain states by Teodoro [3][4][5]. Other recent studies analyzing water bills also identify multi-state or national trends in drinking water affordability over time [6][7][8]. Each of these studies has a slightly different focus and contribution to the literature; we discuss our findings in the context of these studies.…”

“…Given the lack of readily available water quality data from state-level databases, we queried the U.S. EPA's publicly-available SDWIS search function by state [21]. We then use the system names provided in the EFC database to identify and scrape data system by system [1,8]. We only consider and scrape violation records data between the years of 2009 and 2020.…”

“…Despite limited previous research on drivers of variation in bills, we draw on prior studies to generate hypotheses on the expected influence of the systemlevel variables on system bills. Hypothesis 1: A review of multiple rate studies by the GAO suggests that public or quasipublic system ownership types (e.g., municipal, other government) will correlate with lower bills than for-profit systems [8,9]. We anticipate that larger system customer base size will correlate with lower bill amounts based on potential economies of scale [10].…”

Guidelines for water conservation in Brazil

“…Usually, water prices include costs of acquisition, treatment, and delivery of water (Zhang, González Rivas, Grant, Warner, 2022), but studies indicate that the price charged for water in urban centers is below the optimal price (Renzetti, 1992, Timmins, 2002Arbues & Barberan, 2004). One reason for that is that water price is generally not determined by the market, due to this natural monopoly characteristic, and consequently does not reflect its scarcity (Olmstead, 2010).…”

“…The importance of ownership structure in water service provision has been widely discussed in the literature. Although several topics have been included in the ownership analysis -such as effectiveness, equitability, and sustainability -research focus mostly on pricing (Barbosa & Brusca, 2015, Wait & Petrie, 2017Hellwig & Polk, 2021;Zhang et al, 2022) and efficiency (Braadbaart, 2002;Renzetti & Dupont, 2004;Pazzi et al, 2016). Nevertheless, despite the high number of studies, many of them do not provide definitive conclusions concerning the superiority of water utilities from the ownership perspective (P. .…”