Free Market Water

Why is Utah America’s #1, highest water user? Because Utah artificially lowers the price of water by collecting property taxes on homes and businesses—using your tax dollars to subsidize your neighbor’s wasteful watering.

Utah’s wasteful water tax

Utah is unique in collecting property taxes from homeowners and businesses to lower the price of water below the cost of delivery. These taxes are why Utah has America’s cheapest water rates—and why Utah is the nation’s most wasteful water user. If you own property, you’re paying for others to waste water—whether you like it or not.

A curious system

Like any government-funded subsidy, lowering the price of a commodity increases consumption—which is exactly what Utah’s water salesmen want. Utah’s high water use is used to justify spending even more tax dollars on expensive water projects (like the $2 billion Lake Powell Pipeline). After all, the water district proposing this project makes more money collecting property taxes than it does from selling water. The only group not profiting from this system are the taxpayers.

It is perplexing that a state claiming to support free-market principles would invest itself in a tax-based water system that encourages waste. Wouldn’t it make more sense to subsidize conservation measures and let individual users and the free market determine the price of water?

A more conservative approach: Pay for what you actually use

Many fiscally-conservative Utahns are surprised to learn that they pay two, three or even four different hidden water taxes on their homes or businesses, while large government landowners pay no taxes.

This isn’t the case in other states, where 78% of water suppliers don’t collect property taxes, instead pricing water at its real market value and charging only for what was used.

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An Unfair Burden

At first glance, low water rates seem like a good deal for those in poverty, until you look at the burden of the higher taxes they are forced to pay. These taxes make up a much larger percentage of the total income of low-income families, in part because they are paying for the water use of higher-income residents, governments and large institutions. Statistically, low-income families use just a small fraction of the water used by large landowners, yet they still pay for it in higher taxes.


low income houses

How much water would a free market system save?

An economic model created at the University of Utah calculated that Utah would save billions of gallons of water every year while simultaneously reducing the tax burden on residents and businesses.  Reducing water waste would also delay or eliminate the need for billions of dollars in taxpayer spending and debt on unnecessary water projects.

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Plus, indoor water rates would not need to be raised, because the lost revenue could be recovered by utilizing a tiered water rate structure to shift the cost to outdoor use (where the majority of municipal water is used). This structure would lower the burden on individuals by simply charging larger water users the actual price of the water they use.

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Learn more and get involved

Read more on these wasteful water taxes in our Who Pays for Waste report

See how the rest of the West funds water in our Mirage in the Desert report