Price is often suggested as a simple straightforward tool to encourage people to be more efficient in how they use water. However the economics of water demand are not that simple.

Water meets the basic necessity of life, consumption, and hygiene. It creates an atmosphere that suits our lifestyles—landscapes, pools, and perhaps long hot showers. Water is used for economic gain, from creating places attractive to customers to washing silicon chips. The sale of water is also used to finance the infrastructure and costs associated with making water available to a community.

Each of these water uses has its own economic dynamics based on behaviors and motivation for water use which can vary among the consumers in each category. At the same time, the economics for each of these water uses are related, such that changes in one can affect the other. Thus, decision-making about the price of water is not as clear as it may initially appear.

The goal of this Water/Climate Briefing is to increase the awareness of the complexities associated with the price of water by facilitating a discussion about the differences and relationships that exist in the economics of different water uses.