I have blogged previously about the issues facing water/wastewater systems in the U.S. and the challenge of funding replacement of aging infrastructure and upgrading to meet the requirements of the Clean Water Act. One of the most important funding mechanisms are state revolving funds which provide low interest loans for water and wastewater infrastructure.
According to the ASCE, the problem is that most jurisdictions are spending between 1 and 1.5 percent on infrastructure, which is down from 5 to 6 percent spent in the 1960s and '70s. In September 2002, an EPA Gap Analysis concluded that if there is no increase in investment, there will be a $6-billion gap between current annual capital expenditures for wastewater treatment ($13 billion annually) and projected spending needs. The EPA CY2004 clean water needs survey estimated an investment of $202.5 billion over 20 years. In the CY2008 needs survey the investment has risen to an estimated $344.8 billion, primarily as the result of age, deferred maintenance, and population growth.
The AWWA has estimated that the cost of repairing and expanding U.S. drinking water infrastructure will exceed $1 trillion in the next 25 years and $1.7 trillion over 40 years.
According to Forbes, this week the House Appropriations Subcommittee on Interior, Environment and Related Agencies of the U.S. House of Representatives approved a FY2013 funding bill that will cut state revolving funds for water and wastewater. The Clean Water State Revolving Fund (CWSRF) provides loans for water quality improvement projects including municipal wastewater facilities, estuary protection projects, and nonpoint source pollution control. The Drinking Water State Revolving Fund (DWSRF) supports loans to improve drinking water quality, The cuts are significant
- CWSRF - 53 percent cut from the $1.47 billion 2012 to $689 million in 2013
- DWSRF - 9.7 percent cut from $918 million in 2012 to $829 million in 2013.
According to American Rivers, the bill also removes dedicated funding for green infrastructure, water efficiency, and environmentally innovative projects that communities used to implement forward-thinking water management solutions that protect clean water and save them money.
There are alternative suggestions for paying for water/wastewater infrastructure including
- Clean water trust fund - funded by industries that profit from water or damage its quality, including those that make beverages, fertilizers and pesticides, flushable products, pharmaceuticals, water appliances and plumbing fixtures.
- Water Infrastructure Finance and Innovation Authority (WIFIA)
- More private investment - remove state volume caps on private bonds for water and wastewater projects to free up billions of dollars in private capital for the nation’s water infrastructure. McKinsey has suggested that more private sector involvement in infrastructure projects could result in an estimated 30% improvement in construction productivity over 5-10 years and this would translate into a 20% reduction in overall infrastructure spend.