In an effort to curb water use, many utilities, especially in California and Colorado, have been creating “water budgets” for businesses and residents.

Water budgets are a set amount of water that a particular customer can use before incurring extra fees or a significantly higher water rate. In some areas, customers who go over their budgets will incur a “drought surcharge” while in other areas they simply pay more for the water that they use beyond their budget.

In recent years, Banyan Water’s team has seen an increase in the number of utilities that are using budgets as a tool in their drought-response programs.

Why Utilities Choose Water Budgets

Utilities are under pressure to reduce water use in many states. In California, Governor Jerry Brown has even issued an executive order calling for significant reductions in water use across the state. With this in mind, utilities are creating programs to meet the necessary reduction goals.

Utilities have a few options to significantly reduce water use. Among the options that they can pursue are:

       Raising rates, providing an economic incentive for users to decrease use.

       Creating restrictions that forbid certain types of water use. Common restrictions include limiting irrigation water use to certain days of the week or banning water use for car washing.

       Creating water budgets to limit water use.

Water budgets are created for various reasons, but most utilities cite one of the following reasons for choosing water budgets over other options:

Rewarding Conservation – For customers who are efficient about their water use and keep their use within budgets, water rates usually remain low and similar to what they paid before budgets were in place. Users who are using water inefficiently are often the ones most impacted by water budgets.

Customer Choice – Many cities claim that water budgets offer their customers more flexibility in their water use than other options such as specific outdoor watering restrictions or bans on car washing. With water budgets, customers can choose where they want to use water and where they can conserve.

How Budgets are Calculated

Water budgets are calculated a little differently in each utility district, but some of the most common methods include:

       Percentage Reduction from Historical Use – This method generally applies to both residential and commercial water users. The water utility reviews your property’s historical water use, creates an average for each month based on the past three years of use, and creates a budget based on a reduction from that average.

Cal Water, for example, looks at a customer’s use in 2013 and sets their water budget based on a 32% reduction in use from that point (explained in detail here).

– Need-Based Budgets – Districts such as the Laguna Beach Water District, create their water budgets based on how much water a user should need. For example, the needs of a residential property are based on the number of people in the household and the landscaped area, among other factors. For businesses in that area, water budgets are based on type of business, number of employees, and historical water use.

Water Banking

Some districts allow users to “bank” unused water in a particular month for use in the future. For example, if you use less water in April than was in your budget, you can use that much more in a future month without incurring penalties.

Most utilities are very clear on whether or not they allow water banking as part of their budget system, so check the utility’s website to find out whether water bankingis available in your area.


Water needs are unique and at times, water budgets may not be reasonable for a business or resident’s changing needs. Many utilities will grant variances if your water needs have clearly changed. For example, if a retail space has turned into a restaurant, water needs have clearly changed and that space will require a different budget.

Some utilities will take items such as swimming pools into account when calculating water budgets, but in areas with more severe requirements, use of water for pools falls into a user’s standard budget so they must be more efficient elsewhere to leave enough water in their budget for the pool.

Managing Water Budgets

If your area has water budgets, it’s likely that you’ll need to select areas of your property where you can increase efficiency.

For some users, this might just mean being a little more conscientious about water use. In areas where significant reductions are required, it’s a good idea to consider where the easiest reductions on your property could be made. Here are a few tips:

Irrigation Water is Almost Always the Lowest Hanging Fruit.

On most properties with landscaping, landscape water use can be cut back significantly without damaging your plants. If you haven’t already made serious efforts to decrease irrigation water use, that’s a good place to start. Some recommendations are available here.

Cooling Towers Matter.

On most commercial properties, cooling towers are the second biggest water users on site (behind irrigation). If you can increase your cycles of concentration without damaging your system or fix a broken float valve, you’ll go a long way in reducing your water use. More on how to reduce cooling tower water use is available in our paper, “Maximizing Your Cooling Tower Efficiency”.

Install Water-Saving Devices Indoors.

If you’re looking for an automatic, long-term reduction in water use, making the investment in water saving devices such as new toilets or showerheads could be a good plan. A few of the devices most useful for commercial and multifamily properties are listed here.

Check for Leaks.

If you have an undetected leak, even a small one, you could be wasting thousands of gallons of water each month, quickly making it difficult for you to stay within water budgets and costing you money every day. If you haven’t checked for leaks in a few months, invest some time in doing so. A simple first step is to wait for a time when no water should be being used on your property or in a building (perhaps after your office closes for the day and systems are shut down) and see if your meter is still moving at that time.  If it is, either you have a system using water when you’re not expecting it or you have a leak. More on leaks here.

Talk to Your Utility.

Your water provider may have tips and advice, as well as programs in place to help you stay within your water budget. They want you to conserve water, so talk to them about how they can help you save or offer rebates to offset the cost of efficiency improvements.

As more utilities look for ways to conserve water, water budgets may become increasingly popular. If you haven’t already, start planning for ways that you can control your water use.