Water conservation may be defined as ademonstrably beneficial reduction in the amount of water of a certain quality for a specific use. Increasing costs as well as the risk of water shortages are likely to spur more efficient use of existing facilities. In many instances, conservation may be the most cost-effective way of increasing the supply of municipal water. Policymakers need to be familiar with the policy instruments, such as peak responsibility pricing, that could reduce the peak and average demands for municipal water and cost-effective technological options available to customers who wish to reduce water use. This paper is organized around these two themes and reviews the salient empirical findings in this field. Several municipalities have reduced peak demands, and the number of studies in demand management has increased substantially since the early 1960s. However, the interest in applying empirical findings has lagged behind research. Increasing costs are likely to stimulate innovative management and it is critical to explicate the problem and solutions so that policymakers would have the necessary understanding to make rational, cost-effective decisions. Time-and-location specific investigation is essential for enhancing such understand ing.