Rapid increase in global population coupled with escalating climate change has led to a serious water scarcity in the world. The pressure on the water resources is higher in urban areas, where, according to UN Habitat, over 50% of the world’s population have lived since 2007. Hence, urban water managers and policy makers need to adopt water efficiency measures to cope with the increasing water demand and manage available water resources in a sustainable manner. This paper reports on findings of water demand management studies conducted under the EU-funded SWITCH research project on ‘sustainable water management for the city of the future’. Using the case of Zaragoza City (Spain), the paper shows how a tariff structure and other economic instruments have been used to encourage water use efficiency at the endusers’ premises, resulting into a 14% reduction in the city’s water demand between 1996 and 2004, although the population increased by 6.3% in the same period. The study also used 2006/07 billing data from the Uganda’s main urban utility to model a water conserving tariff for domestic consumers in Kampala City. Results from the model show that using a demandresponsive tariff structure, 15% of water produced in Kampala could be conserved, and the utility’s revenue increased by 8%. Water conservation tariffs will have greater social equity benefits in cities of developing countries where water services may be under-priced, intermittent and unfairly distributed in favour of higher income households. Water conserved could be redistributed to the poorer settlements of the cities.