Water bills for Santa Cruz's poorest residents could climb from roughly $60 a month to $111 by the middle of this century, according to a new Stanford-led study that used the coastal city as its central test case for how climate change is reshaping the cost of drinking water. The research, built around a drier future climate scenario, found that entirely new categories of household budget strain are coming for communities that already conserve water aggressively and have few cheap options left.
The study, published in Nature Sustainability on July 8, comes from researchers at Stanford's Doerr School of Sustainability, who set out to translate abstract climate projections into dollars-and-cents impacts at the household level. As ABC7 Bay Area reported, the study found that water bills could nearly double in some areas by mid-century if cities are forced to build costlier new water systems to replace shrinking traditional supplies. Sarah Fletcher, one of the researchers behind the work, said the goal was to bring the consequences of a hotter, drier climate down to something families actually feel every month.
Santa Cruz was chosen as the primary case study because the city relies almost entirely on local surface water, per the same report — specifically, streams and a single reservoir, with no imported pipeline supply to fall back on during dry years. Researchers Fletcher and Jennifer Skerker analyzed data from Santa Cruz to model what could happen if the city has to invest in new, more expensive water infrastructure to keep taps running as the climate dries out.
Decades of Conservation Leave Little Left to Cut
Santa Cruz already runs an aggressive water conservation program, the station's report notes, one that over the decades has cut local residential water use by nearly two-thirds. That success has created what climate researchers call a conservation paradox, according to Earth.com: cities that have already squeezed out most discretionary water use have little room left to trim consumption further when the next drought hits, leaving expensive new supply projects as the only remaining option.
The city's existing conservation program includes groundwater injection wells, and the study noted that future drier conditions could push Santa Cruz and similar cities toward direct purification of wastewater for drinking, or seawater desalination — the latter already in use in San Diego. Direct potable reuse of wastewater is practiced in countries around the world, and California's own regulatory path opened in December 2023, when the State Water Resources Control Board approved health criteria allowing public water systems to purify wastewater directly into drinking water, according to the California State Water Resources Control Board. Those rules took effect in October 2024, but the four-stage advanced purification systems they require come with steep capital costs.
More Than a Third of Households Could Struggle
Stanford's modeling for Santa Cruz showed that more than one-third of households in the city could struggle to afford their water bills under the study's drier scenario. Researchers found that the costs of building new water systems would fall heavily on lower-income households, and Fletcher said lower-income households could face tradeoffs between higher water bills and paying for essentials like groceries and clothing.
Fletcher added that climate change is worsening an existing affordability problem rather than creating an entirely new one. Jennifer Skerker said future water conditions need to be modeled through multiple possible scenarios, rather than assuming that historical rainfall and drought patterns will simply continue. Researchers reported that affordability hotspots are likely to be scattered across California, wherever water sources are limited, while cities with larger reservoirs and cheaper existing supplies might not face the same pressure.
The Santa Cruz findings echo broader statewide numbers. Stanford researchers reported separately in July that roughly 31% of Californians live in households at risk of water poverty, with about 155,000 households statewide already owing more than $1,000 in overdue water bills, according to a Stanford Report. Nationwide, water rates have already been climbing three times faster than general inflation even before major climate-adaptation projects are factored in, Inc. Magazine reported.
A Legal Wall Against Subsidizing Low-Income Bills
California utilities face a structural obstacle in cushioning the blow for low-income customers. Proposition 218, enacted in 1996, requires public water utilities to charge customers strictly based on the direct cost of serving their property, which legally bars agencies from using standard rate revenue to cross-subsidize discount programs for low-income households, according to UC Law San Francisco. Private water utilities in California operate under different rules and are permitted to offer such assistance.
State lawmakers have tried and failed to build a broader safety net. Governor Gavin Newsom vetoed Senate Bill 222 in September 2022, which would have created a permanent statewide Water Rate Assistance Program for low-income residents, citing a lack of ongoing funding in the state budget. That leaves California relying on temporary relief grants and a patchwork of local utility programs rather than a unified statewide system.
Santa Cruz currently runs a Utility Customer Assistance Program that subsidizes lower-income households, supporting both single-family and multifamily customers, according to the City of Santa Cruz. Households qualify if they participate in programs such as PG&E CARE or Medi-Cal. Heidi Luckenbach, the city's water director, oversees the utility as it manages both the new rate increases that took effect July 1 and the ongoing assistance program meant to soften their impact on the customers who can least afford them.
Financial Stakes for Utilities, Too
The affordability squeeze isn't just a household problem — it's a balance-sheet one for utilities. Credit rating agency Standard & Poor's identified customer water rate affordability as an operational financial risk for municipal utilities back in 2022, warning that severe unaffordability drives up delinquency rates and destabilizes utility revenue, according to Stanford University research on the topic.
Santa Cruz isn't alone in raising rates to cover rising costs. Hoodline has previously reported that the San Francisco water bills set to surge after the city's Public Utilities Commission proposed a combined 23% water and sewer rate hike over two fiscal years starting July 1, citing needed investments in aging pipes, treatment plants, and seismic compliance. Fletcher urged state and federal officials to plan ahead for a drier climate and to help vulnerable households absorb the costs, rather than leaving cities like Santa Cruz to navigate the tradeoffs largely on their own.
