This thesis examines the option of privatizing water utilities, requiring residents of Government Owned Housing (GOH) to pay for all consumption. To assist in the payment, a Water Allowance (WA) would be provided to residents based on the average consumption of local Private Sector Housing (PSH) residents. The goal of this thesis is to determine if implementing a WA would reduce the overall water consumption in GOH. Specifically, it determines the historical usage of water in the Naval Postgraduate School's La Mesa Housing Village (LMV) area and the local PSH areas. It then develops forecasting models for both areas to predict the future consumption of water, sets a baseline consumption rate for LMV residents, and identifies the savings that would be generated from implementing the WA program. After validating the forecasting models and comparing costs under the WA concept, this study concludes that the WA concept would save approximately $18,355 annually at LMV alone. Although, the WA concept does not meet the Navy's goal of identifying and implementing by 2005 all life cycle cost effective water conservation measures with a payback period of less than 10 years, it does recoup the initial metering cost of $237,200 in 12.7 years. By implementing a WA concept, the projected savings in LMV alone are approximately 6.1% per person per day. Although the study focuses on LMV, it is assumed that similar water consumption inefficiencies are being demonstrated in other GOH areas.