Drinking Water

Solutions

• Increase funding for water infrastructure system improvements and associated operations through a comprehensive federal program;
• Create a Water Infrastructure Trust Fund to finance the national shortfall in funding of infrastructure systems under the Clean Water Act and the Safe Drinking Water Act, including storm-water management and other projects designed to improve the nation’s water quality;
• Employ a range of financing mechanisms, such as appropriations from general treasury funds, issuance of revenue bonds and tax exempt financing at state and local levels, public-private partnerships, state infrastructure banks, and user fees on certain consumer products as well as innovative financing mechanisms, including broad-based environmental restoration taxes to address problems associated with water pollution, wastewater management and treatment, and storm-water management.

Conditions

The nation’s drinking-water systems face staggering public investment needs over the next 20 years. Although America spends billions on infrastructure each year, drinking water systems face an annual shortfall of at least $11 billion in funding needed to replace aging facilities that are near the end of their useful life and to comply with existing and future federal water regulations. The shortfall does not account for any growth in the demand for drinking water over the next 20 [tip:years.=Fix that leak!
A faucet dripping just once per second will waste as much as 2,700 gallons of water per year. Fix any leaking faucets.]

Of the nearly 53,000 community water systems, approximately 83% serve 3,300 or fewer people. These systems provide water to just 9% of the total U.S. population served by all community systems. In contrast, 8% of community water systems serve more than 10,000 people and provide water to 81% of the population served. Eighty-five percent (16,348) of nontransient, noncommunity water systems and 97% (83,351) of transient noncommunity water systems serve 500 or fewer people. These smaller systems face huge financial, technological, and managerial challenges in meeting a growing number of federal drinking-water regulations.

 In 2002, the U.S. Environmental Protection Agency (EPA) issued The Clean Water and Drinking Water Infrastructure Gap Analysis, which identified potential funding gaps between projected needs and spending from 2000 through 2019. This analysis estimated a potential 20-year funding gap for drinking water capital expenditures as well as operations and maintenance, ranging from $45 billion to $263 billion, depending on spending levels. Capital needs alone were pegged at $161 billion.

 The Congressional Budget Office (CBO) concluded in 2003 that “current funding from all levels of government and current revenues generated from ratepayers will not be sufficient to meet the nation’s future demand for water infrastructure.” The CBO estimated the nation’s needs for drinking water investments at between $10 billion and $20 billion over the next 20 years.

 In 1996, Congress enacted the drinking-water state revolving loan fund (SRF) program. The program authorizes the EPA to award annual capitalization grants to states. States then use their grants (plus a 20% state match) to provide loans and other assistance to public water systems. Communities repay loans into the fund, thus replenishing the fund and making resources available for projects in other communities. Eligible projects include installation and replacement of treatment facilities, distribution systems, and some storage facilities. Projects to replace aging infrastructure are eligible if they are needed to maintain compliance or to further public health protection goals.

 Federal assistance has not kept pace with demand, however. Between FY 1997 and FY 2008, Congress appropriated approximately $9.5 billion for the SRF. This 11-year total is only slightly more than the annual capital investment gap for each of those years as calculated by the EPA in 2002.

Resilience

Drinking water systems provide a critical public health function and are essential to life, economic development, and growth. Disruptions in service can hinder disaster response and recovery efforts, expose the public to water-borne contaminants, and cause damage to roadways, structures, and other infrastructure, endangering lives and resulting in billions of dollars in losses.

The nation’s drinking-water systems are not highly resilient; present capabilities to prevent failure and properly maintain or reconstitute services are inadequate. Additionally, the lack of investment and the interdependence on the energy sector contribute to the lack of overall system resilience. These shortcomings are currently being addressed through the construction of dedicated emergency power generation at key drinking water utility facilities, increased connections with adjacent utilities for emergency supply, and the development of security and criticality criteria. Investment prioritization must take into consideration system vulnerabilities, interdependencies, improved efficiencies in water usage via market incentives, system robustness, redundancy, failure consequences, and ease and cost of recovery.

Conclusion

The nation’s drinking-water systems face staggering public investment needs over the next 20 years. Although America spends billions on infrastructure each year, drinking water systems face an annual shortfall of at least $11 billion in funding needed to replace aging facilities that are near the end of their useful life and to comply with existing and future federal water regulations. The shortfall does not account for any growth in the demand for drinking water over the next 20 years.

Of the nearly 53,000 community water systems, approximately 83% serve 3,300 or fewer people. These systems provide water to just 9% of the total U.S. population served by all community systems. In contrast, 8% of community water systems serve more than 10,000 people and provide water to 81% of the population served. Eighty-five percent (16,348) of nontransient, noncommunity water systems and 97% (83,351) of transient noncommunity water systems serve 500 or fewer people. These smaller systems face huge financial, technological, and managerial challenges in meeting a growing number of federal drinking-water regulations.

In 2002, the U.S. Environmental Protection Agency (EPA) issued The Clean Water and Drinking Water Infrastructure Gap Analysis, which identified potential funding gaps between projected needs and spending from 2000 through 2019. This analysis estimated a potential 20-year funding gap for drinking water capital expenditures as well as operations and maintenance, ranging from $45 billion to $263 billion, depending on spending levels. Capital needs alone were pegged at $161 billion.

The Congressional Budget Office (CBO) concluded in 2003 that “current funding from all levels of government and current revenues generated from ratepayers will not be sufficient to meet the nation’s future demand for water infrastructure.” The CBO estimated the nation’s needs for drinking water investments at between $10 billion and $20 billion over the next 20 years.

In 1996, Congress enacted the drinking-water state revolving loan fund (SRF) program. The program authorizes the EPA to award annual capitalization grants to states. States then use their grants (plus a 20% state match) to provide loans and other assistance to public water systems. Communities repay loans into the fund, thus replenishing the fund and making resources available for projects in other communities. Eligible projects include installation and replacement of treatment facilities, distribution systems, and some storage facilities. Projects to replace aging infrastructure are eligible if they are needed to maintain compliance or to further public health protection goals. 

Federal assistance has not kept pace with demand, however. Between FY 1997 and FY 2008, Congress appropriated approximately $9.5 billion for the SRF. This 11-year total is only slightly more than the annual capital investment gap for each of those years as calculated by the EPA in 2002.

Sources

1. Congressional Research Service, Safe Drinking Water Act: Selected Regulatory and Legislative Issues, April 2008.
2. U.S. Environmental Protection Agency, The Clean Water and Drinking Water Infrastructure Gap Analysis, September 2002.
3. U.S. Congressional Budget Office, Future Investment in Drinking Water and Wastewater Infrastructure, May 2002.
4. G. Tracy Mehan, Testimony before the Subcommittee on Water Resources and Environment, U.S. House Transportation and Infrastructure Committee, February 2009. http://transportation.house.gov/hearings/hearing.aspx.