Special Topics in Environmental Management

The Cost of Clean Water

EPA estimates that there are 156,000 water systems in the United States, with more than 94 percent serving fewer than 3,300 persons. Obtaining a representative financial picture for such a large universe of regulated entities is a complex undertaking.

However, the Agency periodically attempts to do so in its Drinking Water Infrastructure Needs Survey and Assessment (DWINSA).

In 2007, EPA conducted its fourth DWINSA by sending questionnaires to all of the nation’s 584 large water systems (serving more than 100,000 people) and 2,266 medium systems (serving between 3,301 and 100,000 persons). Approximately 97 percent of the large systems and 92 percent of the medium systems returned the questionnaire. Also, EPA contracted water system professionals to conduct in-person site visits to 600 small community systems.

Based on the surveys and site visits, EPA estimated that water systems need to invest $334.8 billion on infrastructure improvements over 20 years (2007 through 2026) to be in compliance with federal and state regulations.

Specifically, $52 billion is needed to comply with existing regulations. That leaves $282.8 billion for nonregulatory costs, typically installing, upgrading, or replacing transmission and distribution infrastructure to allow a system to continue to deliver safe drinking water. “Although aging, deteriorated infrastructure often poses a threat to drinking water safety, these needs occur independently of federal mandates,” notes CRS.

Breaking out the needs by size, the 2007 DWINSA found that medium-sized water systems account for the greatest share, at $141 billion; large systems have a $116.3 billion share; and small systems, a $59.4 billion share.

The total amount is similar to the 2003 DWINSA of $331.4 billion (in 2007 dollars), but a substantial increase over the previous DWINSA calculated in 1999 at $198.2 billion (in 2007 dollars).

According to EPA, the two most recent DWINSAs improved on the earlier efforts by better capturing previously under-reported needs for rehabilitation and replacement of existing infrastructure. Also, to give the DWINSA credibility, EPA says it reached a consensus with states to adhere to consistent policies regarding replacement and rehabilitation.

“The large magnitude of the national need reflects the challenges confronting water systems as they deal with an infrastructure network that has aged considerably since these systems were constructed, in many cases, 50 to 100 years ago,” noted EPA.

Is Funding Adequate?

Faced with the growing cost of providing Americans with safe drinking water, Washington has undertaken a number of steps.

Currently, the drinking water state revolving loan fund (DWSRF) helps water systems finance infrastructure projects needed to meet drinking water standards and address the most serious health risks. States supplement their DWSRF grants with a 20 percent match.

Under the program, Congress provided $829 million for 2008 and the same amount for 2009. The American Recovery and Reinvestment Act provided an additional $2 billion to DWSRF. Congress then approved $1.387 billion of President Obama’s requested $1.5 billion for 2010. The president also requested $1.29 billion for 2011.

CRS notes that while the DWSRF is well regarded, the DWINSA and other studies indicate that greater investment in water infrastructure is needed. A variety of assessments of capital needs have identified annual funding gaps ranging from $5 billion to $23 billion.

Beyond actual funding, some legislators have introduced bills to authorize more funding.

One bill would specifically create a grant program at EPA for small or economically disadvantaged communities for critical drinking water and water quality projects.

Another bill would require EPA or a state to ensure that funds have been made available to smaller systems before taking enforcement actions and that adequate technical assistance has been provided to these systems.

But according to CRS, the sheer number of small systems makes it extremely difficult to administer funding and other assistance in ways that promote clean drinking water and public health. Congress has in fact long recognized the particular difficulties faced by small systems and endeavored to create flexibility.

For example, under the SDWA, states or EPA may grant small systems temporary exemptions from a health standard. This provision was exercised with the 2001 arsenic rule wherein EPA allowed small systems up to 14 years beyond the deadline to come into compliance with the arsenic limits.

However, to provide an extension, regulatory agencies must make a finding that no unreasonable risk to health will result. This finding has proven difficult for many states, and hence, extensions for small systems are relatively rare.

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