Viewpoint: Let the private sector help with water infrastructure challenges
For most Americans, access to clean drinking water is as effortless as turning on the tap. At a cost that is typically less than a penny per gallon, substantially less than other developed countries, clean water is often taken for granted. But many of the pipes that make it so easy for 300 million Americans to take clean water for granted were originally intended to survive 50 to 75 years, yet they have been in service for more than 100 years. Without renewal or replacement, water pipes in the U.S. that are classified as poor, very poor or life-elapsed will increase from 10 percent to 44 percent by 2020.
Already, aging wastewater systems discharge billions of gallons of untreated wastewater into surface waters every year. Leaking and broken pipes waste nearly 2 trillion gallons of clean drinking water each year. And every two minutes, somewhere in the U.S., a significant water line ruptures — often underground where it is not visible — risking major damage to roads and structures.
A recently released study by White Plains, N.Y.-based ITT Corp. confirms that American voters value their water service over any other, from electricity to Internet to cable television. The "Value of Water Survey" finds that 80 percent of Americans support water infrastructure reform. Twenty-nine percent believe the U.S. system, in its current state, is approaching crisis stage. And, as many as three in four anticipate "direct and personal consequences" if water service is disrupted. That growing public awareness affords governments an unprecedented opportunity to tackle the nation's water challenges through collaboration and innovation.
The U.S. Environmental Protection Agency estimates that it will cost upwards of $1 trillion over the next 20 years to replace and repair the nation's water and wastewater infrastructures. Who is going to pay the massive repair bill?
The burden, which would normally fall on the public sector, can be reduced if private sector investment in water infrastructure is more widely enabled. Some argue that private investment would allow private companies to "own" the nation's water future. Nothing could be further from the truth. Water is a public resource regulated by federal and state governments, and private sector investment can help treat and deliver that resource to consumers.
What can be done to attract more private investment? The Sustainable Water Infrastructure Investment Act (SWIIA) — which, although it passed the U.S. House twice, failed to reach the Senate floor for a vote in 2010 — would remove water and wastewater from the limitations that have been placed on private investment through the use of private activity bonds. The bonds provide low-cost financing for water and wastewater projects. Caps placed on private activity bonds in 1986 have never been updated, and lifting state volume caps, as SWIIA calls for, would enable local governments to tap into private sector capital. Reintroduced as a bipartisan, bicameral act in the 112th Congress, the SWIIA is gaining bipartisan support with over 30 co-sponsors in the House and is currently awaiting consideration from the House Ways and Means Committee.
Second, public-private partnerships should be more widely pursued for water and wastewater services. Although approximately 85 percent of water systems are municipally owned, the private sector has been a steward of the U.S. public water supply for 200 years and has a long-standing record of bringing capital, efficiencies and innovations to municipal partnerships. Now is the time to enable the private sector to provide resources to help financially distressed municipal systems update, maintain and operate their facilities in a true partnership.
Third, we need to invest in innovative solutions to water quantity and quality challenges. There is a finite amount of source water, and it needs to be used in a sustainable way. The use of innovative technologies — such as advanced metering and sensing systems to help detect and stop losses of treated water, water reuse (treating wastewater to a high quality for use in heating/cooling systems, irrigation and other applications), and desalination of sea water or brackish water sources — will help maximize water resources.
For quality water to be ready at the tap in the future, it will require a strong commitment now. Everyone — government, utilities and American households — must understand what is at stake and work together to create viable solutions. The Sustainable Water Infrastructure Investment Act is an important first step.
Jeff Sterba is the president and CEO of Voorhees, N.J.-based American Water, the nation's largest investor-owned water and wastewater utility company serving 15 million people in more than 30 states and parts of Canada.
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