Full-Cost Water Pricing
Situated along the shore of Lake Michigan, metropolitan Chicago has benefitted for centuries from an abundance of fresh water. The infrastructure necessary for delivering water and removing wastewater is primarily underground and, subsequently, is often forgotten until a problem arises. However, there is growing recognition of the aging status of water infrastructure and the resulting challenges faced by our community water suppliers. At the same time, a new regional understanding has emerged on the role of water pricing in the effective provision and management of our water resources and infrastructure.
Local governments are the primary investors in water infrastructure. Revenues generated by water rates are the primary source of revenue for most community water systems. Setting water rates that recover the full cost of providing water service can contribute to financial resiliency and create enough revenue to maintain the system. Sustainable rates enable communities to meet water demand reliably and safely. Recovering full costs is especially important because poor infrastructure poses one of the top three challenges for northeastern Illinois water utilities, and failing infrastructure can impose high costs on communities in terms of damage and inconvenience.
GO TO 2040 specifically recommends full-cost pricing as fundamental to addressing both the need for investment in water infrastructure and the challenge of accommodating millions of additional residents in livable communities by mid-century. CMAP, in partnership with Illinois-Indiana Sea Grant and the University of Illinois Extension, has developed a manual that explores full-cost pricing as a tool for local decision makers interested in sustainably managing community water supply.