Why aren’t we getting our money’s worth from our water infrastructure?

I’d like to believe our country is very much aware of the threat to our existing water infrastructure resources, especially after our recent report on water stress and climate variability. I’m thoroughly unconvinced, however, that many Americans realize the manner in which we’re planning to fix our water problems may be entirely wrong.

Our latest report on America’s Water at the Columbia Water Center is among the very first to systematically explore national survey data on water rates and identify the major financial influences pushing and pulling on our water utilities. In America’s Water: An Exploratory Analysis of Municipal Water Survey Data, authored by a team led by Bianca Rahill-Marier, we discovered that even though U.S. water infrastructure debt is rising faster than the rising water rates even as the condition and resilience of our infrastructure continues to deteriorate.

Through the first decade of this millennium, the average U.S utility debt jumped 33 percent, while our average water rates climbed 23 percent. If that doesn’t get your attention, try this statistic: at roughly one-third of U.S. utilities surveyed by the American Water Works Association, debt and rates more than doubled from 2000 to 2010. To me, this is clear proof that our country’s current debt- and rate-hike cycle is something of a trap. The industry organizations like the American Water Works Association and the American Society of Civil Engineers have been highlighting the trends in increasing pipe failures, and aging dams and levees that portend serious vulnerabilities to floods and droughts and public health. However, their primary articulation goes to the estimated trillions of dollars that need to be spent to replace these pipes, levees, dams, and pumps. What are really some options we should look at in the near term and in the long run?

First, we can Improve Operational Efficiency. Because low productivity rates are borne by customers through higher rates, operating expenses are one of the key variables affecting water rates. Utilities would be wise to closely scrutinize their operational costs per employee and costs per gallon processed. Improved efficiency means not only lower costs for utilities and customers, but also a reduced environmental impact for all of us. In our study, we find that on average, larger utilities tend to have higher productivity per employee, suggesting that organizational scale, properly utilized can be effective. In the information age, this may suggest not just a large local utility, but coordination on research, data processing, and knowledge sharing across a network of smaller utilities. Investments in sensor based technologies, control systems and data analytics could also help improve productivity. A question is how small operators can convince regulators and society of the value of such investments.

Next, consider that Source Matters. A water utility tends to use the least expensive source to its limit, and only then consider other resources. A much more economical approach for areas with low-cost water sources, such as groundwater, is to ensure the long-term viability of the resources. This is especially critical during periods of population growth, as demonstrated in our look at Water in 2050. Today, agriculture consumes much of our water resource, and contributes to the depletion of groundwater in many parts of America, from the Midwest, to the Southeast to the West. Agricultural water use efficiency could be dramatically improved. Municipal water utilities may want to work with state regulators to invest in programs that allow trades of groundwater rights to higher value users such as cities and industry through investments in improved irrigation efficiency by farmers and transfer of the water saved to cities. This could benefit both the rural economy and cities, and improve the financial and environmental sustainability of water use.

We should also explore Existing Rate Structure Alternatives. Our study shows that efficiency and water resource conservation are critical rate drivers, something the municipal solid waste sector recognizes and address rather well. By developing a sliding scale fee system, the sector encourages waste reduction by charging premium rates to customers who exceed pre-set limits. We’re happy to report that some of the municipalities identified in our study already have sliding scales in place.

Finally, in what sounds like a basic business principle, let’s Consider All Revenue Sources. Connection fees, green infrastructure incentives, savings performance contracting: all of these alternatives to usage rates can significantly impact revenue generation. Public-private partnerships also have a proven track record, with the investment community providing liability transfer options for municipalities.

I find it challenging to sum up the vast research conducted over so long a period of time, but I think the crux of the problem lies in simple cause and effect. Federal funding for water infrastructure has almost dried up over the past three decades, and that means many utilities are discovering they cannot raise rates high enough to pay down existing and projected debt levels.

Our study further demonstrates the need to rethink the future of U.S. water, including how we can more effectively address our Water Footprint. And that future comprises both how we’ll pay for the critical services we need and what we’ll have to do to stimulate sustainable water usage. In the long run, we need to consider a significant redesign of our water infrastructure. For urban water supplies, one could achieve significant reductions in what is abstracted from rivers and groundwater if we consider increasing water reuse, point of use storage, treatment and reuse as integral elements of the infrastructure. This could also reduce the total amount of energy used in pumping water through the water and wastewater infrastructure, which would offer a mechanism to partially pay for the new investments that are likely to be energy intensive. Research in systems engineering of water and wastewater infrastructure to explore new technologies and designs is urgently needed to shape our water future. Similarly, we need to understand how flood plain zoning and green infrastructure can be leveraged to reduce the impacts of floods on water supply systems.

About Upmanu Lall

Dr. Upmanu Lall is Director of the Columbia Water Center at Columbia University and a leading expert on hydroclimatology, climate change adaptation, risk analysis and mitigation. His research has emphasized hydrology, water resource systems analysis, operations research and stochastic processes with applications to flood/drought risk and uncertainty assessment and the design and operation of water systems. He is concerned with the issue of global and regional water sustainability, and the more general issue of modeling and managing planetary change due to coupled human and natural dynamics. He is developing technical and policy tools for the projection and management of environmental change as part of a quantitative approach to sustainability of earth systems.

America’s Water is a major initiative of the Columbia Water Center and its partners.