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california Water Today 99 Table 2.4 Household water and wastewater costs in the mid-2000s (2008 $) Region Average yearly gross water use (af) Average water price ($/af) Average monthly water bill ($) Average monthly wastewater bill ($) Water and wastewater bills as a share of median income (%) San Francisco Bay Area 0.37 1,190 36 31 1.07 Central Coast 0.38 1,857 59 28 1.68 South Coast 0.58 985 48 23 1.46 Inland Empire 0.59 748 36 18 1.28 Sacramento Metro Area 0.49 789 32 26 1.23 San Joaquin Valley 0.63 545 29 19 1.26 Rest of state 0.47 886 35 25 1.78 California 0.52 959 42 24 1.36 sOURcEs: Authors’ calculations using data from black and Veatch (2004, 2006) for water and wastewater rates and the U.s. census for household incomes. NOTEs: The table reports charges for single-family households. Water rates are for 2006; wastewater rates are for 2004; both are converted to 2008 dollars using the consumer price index. The sample includes 443 water service areas and 560 wastewater service areas. The considerable regional variation in water prices reflects differences in local infrastructure and water supply costs. The regional breakdowns here are based on counties and differ slightly from the hydrologic regions in Tables 2.1 and 2.2. communities in the inland Empire (Riverside and san bernardino) are located in the south coast, the south Lahontan, and the colorado River regions. san Joaquin Valley includes the san Joaquin River and Tulare basin regions. “Rest of state” includes rural counties in the sacramento River region, the North coast, and the North Lahontan regions. Environmental water: an undervalued resource Environmental flows, healthy watersheds, and the services they provide—often known as ecosystem services—add economic value to California (Box 2.3). However, these benefits are often not readily apparent because the market does not generally put a price on them (National Research Council 2005; Brauman et al. 2007; Daily et al. 2009). As a result, the value of ecosystem benefits is overlooked in many cost-benefit analyses used to evaluate water investments. The failure to consider environmental values has contributed significantly to the degradation of aquatic ecosystems (Introduction, Chapter 5). Although new tools are emerging to estimate the economic values of ecosystem services, such valuation is not without challenges (Boyd and Banzhaf 2006). The difficulties stem, in part, from the different methods of valuation that must be used to compare services (Freeman 2003). Some commodities produced by freshwater ecosystems, such as produce and fish, have easily identified market values. For instance, in 2007, fisheries and