Providing sufficient, safe, and reliable drinking water is a growing challenge as water supplies become more scarce and uncertain. Meanwhile, water utilities in the United States lose approximately 17% of their delivered water to leaks each year. Using data from over 800 utilities across four U.S. states, California, Georgia, Tennessee, and Texas, we characterize the heterogeneity in water losses across the U.S., develop a model to assess the economically efficient level of losses, and use this model to compare the net benefits of several proposed water loss regulations and modeling approaches. Combining economic and engineering principles, our model shows that for the median utility, it is economically efficient to reduce water losses by 34.7%, or 100 acre-feet (AF) per year. The median cost of water savings from leak management is $277/AF, which falls well below the cost of traditional water management tools. However, the optimal level of water losses strongly depends on utility-specific characteristics, leading to large differences in the potential for cost-effective leak reduction across utilities. We show that water loss management can lead to water savings that generate net economic benefits, but only if management approaches incorporate economic and engineering principles.
