As the 4th most populous and 2nd fastest growing region of the U.S., 70% of Florida's 16-million citizens reside along the coastline in areas served by shallow, fragile aquifers that have largely been destroyed by over-pumping and saltwater intrusion. Resulting wastewater discharge and runoff have contaminated natural waterways and aquifer recharge basins. A case study from the Tampa Bay, Florida (U.S.) region reveals that water suppliers are providing conservation incentives to consumers as a cost-effective alternative to expanding infrastructure capacity to meet the demands of population and economic growth. Research at the University of Florida shows the benefit-cost of several water saving alternatives and the corresponding “willingness-to-pay” for several consumer markets. Together, a methodology is introduced wherein the water supplier can create “optimal” market-based incentives for consumer investment in water saving measures that maximize water use reductions and minimize conservation program costs. The indirect costs of water use such as energy emissions and watershed destruction (externalities) is also addressed.