The Burden of High-Water Bills: A Comprehensive Look into Water Rate Trends in North Carolina and Its Effect on Affordability

Access to affordable drinking water has become increasingly difficult for low-income households due to increasing water bills that outpace inflation. This study examines water affordability in communities across North Carolina by analyzing water costs at a 3000-gallon monthly consumption level from 2010-2020. Notably, this study investigates the relationship between water costs, operational attributes (such as ownership type and water source), and socioeconomic factors (including income levels and poverty rates) using data from the Environmental Finance Center at the University of North Carolina’s School of Government, the U.S. Census, and the US EPA. Following a review of the literature on water affordability, we investigate several trends to understand the extent to which water affordability concerns are manifesting in North Carolina. First, we investigate changes in water bills over time and compare the increases to changes in wages. Higher rates of change in water bills relative to wages would make it harder for lower-income households to pay their water bills. The results indicate that wages have not kept up with water bills prices; the growth rate in the cost of water services is approximately double that of median income (43.11% versus 21.36%). Second, we investigate the relationship between the socio-economic characteristics of the service population and the cost of water. Water utilities primarily serving poorer communities may be financially worse off than those serving wealthier communities, as indicated by water system operating ratios and bill levels. Graphical evidence shows how these changes over time for communities with high and low poverty thresholds (25^th and 75^th percentiles) in 2010. This suggests that whilst the low-poverty areas were higher, the trendlines indicated that the gap was narrowing. Additionally, the financial performance of utilities serving higher-poverty areas generally had a lower operating ratio, indicating that these utilities were more likely to be struggling to cover costs. Next, we investigate whether there may be spatial clusters of high prices throughout North Carolina. This was analyzed by creating a hotspot map that shows where high prices are congregated. It indicates that there is slight clustering in the eastern part of the state, which raises questions about why that is the case. Finally, we investigated the relationship between utility characteristics and the cost of water using a multivariate regression model to determine how these factors correlate with bill levels. The results indicate that utilities that directly source their water from either surface water or groundwater sources generally charge less than those that purchase water. Similarly, government-run water utilities (i.e., local government units) generally have lower bill levels than privately owned utilities. Though further research is needed to flesh out these relationships fully, this study’s findings can inform policymakers’ approach to tackling water affordability concerns in North Carolina.