Why Water Infrastructure Investments Would Make a Big Splash

Infrastructure Week is here again, a time when swaths of stakeholders – from local, state, and federal leaders to think tanks, trade associations, and businesses large and small – unite to call attention to the importance of bringing our infrastructure up to 21^st century standards. It’s a conversation that happens more than one week a year, but this week, the dialogue is more focused than ever on developing an aggressive, proactive game plan for modernizing America’s infrastructure in a way that brings together the best of the private sector and government at all levels.

Almost every facet of our nation’s infrastructure system is in need of investment, including our roads, bridges, ports, and railways. America’s water infrastructure, in particular, desperately needs attention. When you turn the tap on in your kitchen, take a drink from a water fountain, or flush a toilet, you are being served by our country’s water infrastructure. These systems have made our lives easier, but their prevalence has also lulled us into a false sense of security. The hard reality is that these systems are aging and require significant investment.

In the American Society of Civil Engineers (ASCE) latest Infrastructure Report Card, U.S. drinking water systems received a “D” grade, with ASCE citing an estimated 240,000 water main breaks each year that waste over two trillion gallons of treated drinking water. A recent ASCE study estimates that our country’s water infrastructure needs an additional $82 billion every year over the next 10 years in order to keep pace with consumer demand.

This investment gap provides a unique challenge on all fronts, but closing the gap is something the vast majority of Americans believe should be a priority. In fact, a new survey from the Value of Water (VOW) campaign finds that 88% of voters think rebuilding water infrastructure is very important.

The needs may seem staggering, but here is the good news: Investment in water infrastructure is directly linked to economic growth. VOW found that closing the investment gap over a 10-year timeframe would generate over $220 billion in annual economic activity and create and sustain 1.3 million jobs. Indeed, every $1 spent on improving the country’s water infrastructure generates $6 in returns, and every job created in the water sector supports the creation of another 3.68 jobs in the national economy. Investing in water can make both our infrastructure and our economy stronger.

As is the case for infrastructure modernization on the whole, the costs of inaction are great. Just a single day of water service disruption would result in a loss of $43.5 billion in sales and a $22.5 billion loss in the national gross domestic product. Think about it this way: One-fifth of the U.S. economy would essentially come to a standstill if it did not have access to reliable and clean water.

Unfortunately, there is no mythical pot of federal funding that will solve the nation’s infrastructure challenges, so it is important to put the needs in perspective. Every year, regulated water companies cumulatively invest billions into their water systems; the six largest companies alone invest a combined $2.7 billion annually. That $2.7 billion is more than the current total federal appropriation for the clean water and drinking water state revolving fund (SRF) programs, which is about $2 billion.

As those figures indicate, laying the groundwork for continued private sector investment – and encouraging more of it moving forward – will be a crucial component of an infrastructure strategy.

Research from PricewaterhouseCoopers (PwC) found that a few changes to federal law could have an enormous impact. These changes include encouraging regionalization in the water sector through the SRF programs, lifting the cap on private activity bonds, and expanding eligibility of the Clean Water State Revolving Fund to all water service providers. PwC found that these changes could lead to an additional $58-$68 billion in incremental private water and wastewater infrastructure investment.

This Infrastructure Week is about the choice between action and inaction. “The future won’t wait, and neither can we,” is the driving message for this year’s events, and it is our fervent hope that policymakers will soon show renewed willingness to be proactive, to offer creative solutions, and to tackle the infrastructure challenge head on.

Truly addressing our nation’s growing infrastructure problems will require leadership and cooperation among all levels of government, increased engagement by the private sector, and an involved American public. The fix may not be easy, but knowing how closely America’s infrastructure is intertwined with the prosperity of our economy, our businesses, and our families, it’s bound to be worth it.