AbstractWater use directly causes a significant amount of energy use in cities. In this paper we assessed energy and carbon dioxide emissions related to each part of the urban water cycle and the consequences of some water demand management policies in terms of water, energy, and CO2 emissions in urban water users, water and energy utilities, and the environment. First, we developed an hourly model of urban water uses by customer category, including water‐related energy consumption. Next, using real data from the East Bay Municipal Utility District in California, we calibrated a model of the energy used in water supply, treatment, pumping, and wastewater treatment by the utility, obtaining also energy costs. Then, using data from the California Independent System Operator, we obtained hourly costs of energy generation and transport to the point of use for the energy utility. Finally, using average emission factors reported by energy utilities, we estimated greenhouse gas emissions for the entire urban water cycle. Results for East Bay Municipal Utility District show that water end uses account for almost 95% of all water‐related energy use; however, the remaining 5% of energy used by the utility still costs over USD12 million annually. The carbon footprint of the urban water cycle is 372 kg CO2/person/year, representing approximately 4% of the total per capita emissions in California. Several simulations analyze the consequences of different water demand management policies, resulting in significant economic impacts for water and energy utilities and environmental benefits by reducing CO2 emissions.