Why does water cost more in some parts of California than others? | Opinion

The price of water varies greatly throughout California, with some farmers paying next to nothing and some cities paying a lot. But why? What drives these price differences?

Many farmers along the Colorado River receive water from federal projects at little or no cost, while some agencies in coastal cities — such as San Jose and Carlsbad — pay over $2,000 per acre-foot.

Consider how, this past holiday season, many of us bought gifts from online retailers who provide “free” delivery. We have come to expect to only pay for the product itself — not its delivery. But the cost structure for water is almost exactly the opposite: Water itself is essentially free; what we pay for is the delivery system.

Almost no one in cities or on farms pays more than a nominal amount for water itself. Instead, water users pay for the systems that move water from the source (reservoirs, lakes and rivers), treat it to meet drinking water standards and deliver it reliably.

Wholesale prices reflect the cost of delivering water to a specific place for a specific use, not the value of the water itself. The farther this water travels, the more it costs to move and treat it, and if you want high-quality water service available on demand from your kitchen instead of the muddy water delivered to farms, you have to pay more. Usually a lot more.

Ensuring that water is always available, even during summer months or drought, requires major investments in water storage projects like reservoirs. Water prices need to be high enough to cover these costs.

Urban water users generally pay higher rates because water for homes in coastal cities must travel long distances through an elaborate network of infrastructure. It also needs to be treated and then pressurized for use on demand.

Public water utilities that undertake this work are not allowed to charge more than the cost, while private water companies typically do not reap windfall profits. In fact, the rates they charge are tightly regulated to protect water users. And this regulation works; compared to a bottle of water, which often sells for $1.50 or more at your local supermarket, the average Californian gets the same amount of tap water for a small fraction of a penny.

It’s true that farmers pay less for water compared to residential customers. However, the water delivered to farms is different because it’s generally untreated and not pressurized. It has low energy costs to deliver it because it moves through gravity-fed canals. It’s also not available on demand; farmers typically need to order water a week or more in advance.

While water may appear cheap in some places, there is almost always an explanation. In some cases, cities and farms signed up early for water projects built many decades ago — they have often already repaid the cost of building the canals and pumps that move the water. In other cases, the water system costs are paid with property taxes or developer fees. These users do in fact pay for water, but the fees are paid in other ways than on a water bill.

Put simply, water isn’t like an online order that comes with “free” delivery. The water itself may cost little, but getting it to where it’s needed — clean, reliable and on demand — requires significant investment.

Kurt Schwabe is a senior consultant at the Public Policy Institute of California (PPIC) Water Policy Center and a professor of environmental economics and policy at UC Riverside. Bradley Franklin, a research fellow at the PPIC Water Policy Center, is an agricultural and environmental economist. Greg Gartrell, who is an adjunct fellow at the PPIC Water Policy Center, also contributed to this piece.

This story was originally published February 8, 2026 at 5:00 AM with the headline "Why does water cost more in some parts of California than others? | Opinion."