Recent shifts in the institutional arrangements of the water sector in England and Wales have witnessed an explicit move away from the goals of social equity and universal provision towards implementing the principles of economic equity and efficiency through cost-reflective pricing. Coupled with widespread recognition that there is a need to promote environmentally sustainable water use, there are growing concerns about the implications of new charging systems in providing fair and affordable water for low-income households. In this article, we argue that current strategies for equitable charging, based on the valuing of water as a resource, inadequately account for social and geographical differentiation in supply and demand. We examine how developing an understanding of demand situated within social and geographical context can inform debates about cross-subsidisation and the emerging tensions between social inequality and economic and environmental sustainability.