Measuring Household Affordability for Water and Sewer Utilities

Rising costs and recent high-profile crises have brought renewed and increasing attention to the affordability of water and sewer service. Meaningful, accurate assessment of affordability is critical as utility leaders seek to serve low-income customers while also raising the revenue necessary to maintain and advance public health and conservation. Unfortunately, the predominant conventional method of measuring household affordability is fundamentally flawed and often misleading. This article advances a more accurate and meaningful method for measuring the affordability of water and sewer service for low-income households. The proposed method accounts for essential household water needs, income disparities, and core nonwater/sewer costs. After detailing the method, the new approach is used to measure water and sewer service affordability in the 25 largest US cities. The article concludes with a discussion of the new method's limits and general guidelines for its use in policymaking and rate design.