Water is now considered a scarce but essential resource that should be managed in an integrated manner. The traditional approaches of resource development are now considered as unsustainable. Water demand management (WDM) is a new approach that aims at influencing demand & thus improving distribution efficiency. Economic measure through water tariff is one of the WDM tools. Water tariffs are recognized to be one way of curbing growth in water demand, and encouraging more efficient use of water. It is essential for the effective and equitable allocation of water resources. This paper investigates different water tariff structures & seeks to identify the factors affecting WDM through tariffs. The paper pays particular attention to the situation in Bahrain through preliminary exploration of price elasticity of demand for water and its comparison with figures from other countries.