The Safe Drinking Water Act of 1974 (PL 93‐523) has necessitated a fundamental reexamination of the ways in which drinking water is supplied in the United States. A primary feature of the act is that the economics and cost of water supply and water delivery must be considered before regulations are promulgated. The tools available to water utility managers that will enable them to make these assessments are limited. This paper describes the development and application of a spatial costing system that will allow the manager to determine the real costs associated with delivering water to the consumer.