The study is directed at helping cities make decisions about industrial waste water surcharges by estimating their effect on industrial wastes discharged into municipal systems and on the quantity of water demanded from municipal systems by industrial firms. The gains to society that are possible with the introduction of surcharges are also estimated. Multiple regression equations were specified for estimating elasticities of demand. 198 time-series observations were obtained from 34 cities in the United States. Data substantiate the negative relations hypothesized among these prices and quantities. Surcharges do cause a reduction in industrial wastes, and the cities with high surcharges on BOD have less industrial biodegradable waste to treat than those with low surcharges. Surcharges on wastes also cause a reduction in the industrial use of water. Available evidence also supports the conclusion that cities which charge the most for water sell less water to industry per $1000 value added in manufacturing and receive fewer pounds of waste from industry. (Author)