This report documents a project undertaken for the California Urban Water Conservation Council to create a method to calculate water utility avoided costs and assign economic value to the environmental benefits of raw water savings as a result of implementing urban water conservation programs.

It is assumed that water savings associated with implementation of conservation programs can be quantified and represented as a reduction in the demand for water from a particular set of supply sources. This demand reduction may in turn result in a change to the availability of an environmental benefit provided by that source. Environmental valuation, as it is applied here, is relatively new and there are numerous complications, ambiguities, data gaps and differences of opinion in the application of the methodology. For that reason, this report should be considered a pioneering effort to put together all the required elements in a single coherent framework.

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