Glenn Barnes is a senior project director with the Environmental Finance Center and is the co-director of the Smart Management for Small Water Systems project.

All drinking water systems should be concerned about water loss—water that is treated but does not reach an end user because it leaks out through the system’s network of pipes.  Water loss wastes both a precious resource (the drinking water) and potentially a lot of money as well (energy use, chemicals, wear and tear on equipment, etc.).

For water systems that charge customers for water based on the volume of that customer’s use, their water loss concern decreases once the water reaches the meter.  It is up to the end-use customer to use that water efficiently.  Certainly, water systems have some interest in how that water is used, especially in drier areas of the country where raw water supplies are limited, but at least the water system will get paid for every gallon consumed, efficiently or otherwise.

But for water systems that do not charge customers for water based on the volume of usage, the story is very different.  A water system operated by an apartment complex or mobile home park or university that includes water use in the rent, for example, should be concerned about how every drop of water is used.  Old, inefficient fixtures and leaks can cost the water system significant revenue.

Water systems with volumetric charges can set their rates in such a way that encourages water conservation—by using an increasing block rate structure, for example, where the per gallon rate customers pay increases as their monthly usage increases.  But systems without volumetric charges send exactly the opposite message—a rational consumer who has paid a fixed amount for unlimited water use should use as much as possible every month to maximize his or her benefit.

A few months ago, a water system operated by a mobile home park in Ohio shared this story with us at a workshop.  At this mobile home park, unlimited water use is included in a fixed charge paid with the rent—$ 25 per month.  Most of the residents of this mobile home park use water inside the home for cooking, cleaning, laundry, showers, and toilets.  But one resident, a retired gentleman, gets up every morning, waters the grass and flowers around his trailer, and washes the trailer from top to bottom.  He pays the same amount for water as everyone else.  This raises both financial and equity concerns—the other mobile home park residents (or the owner) are effectively subsidizing his water use.  This particular water system is now considering a separate fixed charge for outside use in addition to the fixed charge for inside use.

At another workshop, a water system operated by an apartment complex shared their story.  This complex gets funding from the Department of Housing and Urban Development (HUD) to subsidize the rent payments.  Under HUD rules, the apartment complex must include water use as part of the rent it charges, so there is no possibility to charge based on the volume of water used.  The biggest issue the apartment complex owners face is leaky faucets, showerheads, and toilets.  Residents have no incentive to inform the apartment management of issues because they do not see higher bills as a result.

In addition to regular inspections of water devices, these apartment owners should also consider installing low-flow fixtures to make water use efficient every day.  The same strategy can be followed by other water systems that have high levels of domestic water use such as hotels and restaurants.  Even some prisons are focusing on water efficiency by installing devices that limit the number of times per hour an inmate may flush the toilet.

The savings on water treatment costs generated by these water efficiency devices can help water systems that do not have volumetric charges control their costs.