Water and Wastewater Rate Hikes Outspace CPI

Water and wastewater treatment and delivery is the most capital-intensive of all utility services. Historically underpriced, water and wastewater rates have exhibited unprecedented growth in the past fifteen years. Steep annual increases in water and wastewater rates that outpace the Consumer Price Index (CPI) have increasingly become the norm across the United States. In this paper, we analyze water and wastewater rates across U.S. census regions between 2000 and 2014. We also examine some of the driving factors behind these rate increases, including drought, water source, required infrastructure investment, population patterns, and conservation effects. Our results demonstrate that water and wastewater prices have consistently increased and have outstripped CPI throughout the study period nationwide, as well as within each census region. Further, evaluation of the current and upcoming challenges facing water and wastewater utilities suggests that sharp rate increases are likely to continue in the foreseeable future.