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Seizing the water infrastructure moment nationally and locally

#Featured Articles,
#Paying for Water Infrastructure
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04/08/22
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Joseph W. Kane, Fellow - Brookings Metro, and Andy Kricun, Senior Fellow - U.S. Water Alliance and JWW co-chair

Aging and undersized sewers, contaminated drinking water, and lead-tainted pipes imperil millions of households and communities nationally. At the same time, more severe flooding and drought conditions have exacerbated the nation’s water infrastructure deficit. Decades of inaction and underinvestment—particularly at a federal level—have multiplied these and other water infrastructure challenges, but the recently passed Infrastructure Investment and Jobs Act (IIJA) holds promise to address them via an infusion of more than $57 billion to states and localities over the next five years. Extra federal funding will not only accelerate necessary system upgrades (think fewer leaking pipes and burst water mains) and reduce the total rate burden, but will also provide much-needed support for new plans and programs into the future.

But more federal funding alone will not solve everything. Federal, state, and local leaders are in a crucial implementation phase to figure out what types of priorities and projects they are going to act on. Harnessing IIJA funding will require navigating several new grant programs as well as existing and expanded programs, such as State Revolving Funds (SRF). And there are significant resources challenges and other hurdles to implementation, particularly among the 50,000-plus utilities that own and operate all this infrastructure. Implementing the IIJA is shining light on several long-standing challenges the water sector has faced: highly fragmented and localized needs; ongoing fiscal, technical, and staffing challenges; struggles to address climate concerns; and more.  

Seizing the current moment requires an outcome-driven approach across the water sector—not just a project-driven approach. Federal, state, and local leaders cannot simply focus on funding and individual projects in isolation; they need to view the IIJA as an initial down payment in overcoming long-standing challenges across the country. 

The water sector’s long-standing challenges 

Leaders cannot fixate on the next five years of IIJA funding as an end itself. Instead, their focus should be on a set of outcomes that lead to more lasting impacts for people and places. Ideally, those outcomes connect to the vexing challenges that different regions and utilities have long faced, including: 

  • Lack of coordination. The massive scale and variety of national water infrastructure needs are not simply due to a lack of investment, but a fracturing of responsibilities and the traditional siloed nature of water governance. For instance, service areas and watersheds often do not match political boundaries, and utilities vary widely in their operations and capital plans. As a result, they may measure and evaluate their needs in isolation and fail to create comprehensive, forward-looking policies at a regional scale. 
  • Lack of proactive investment. States and localities are responsible for over 90% of public spending on water infrastructure annually, which makes it difficult to fix their aging, existing systems—let alone stay ahead of evolving needs. A lack of fiscal capacity, combined with ongoing revenue uncertainties, also makes it hard to test new designs, technologies, and other approaches. In turn, many leaders are reactive, not proactive, and face widespread system vulnerabilities and costs over time. 
  • Lack of staffing capacity. Struggles to hire, train, and retain a skilled workforce—from water treatment operators to managers—also limit the ability of utilities to construct and maintain water infrastructure reliably. The availability of new federal funding also demands having enough grant writers and other staff to submit applications and get money in the door. 
  • Lack of equity. Everyone, no matter where they live, is entitled to safe drinking water and clean waterways at an affordable rate. However, water affordability has become a major challenge in many localities, with average monthly residential bills up nearly 50% since 2010—rising far faster than incomes. At the same time, many lower-income households and communities of color continue to face higher flood risks and other environmental justice concerns, which utilities and other leaders have been slow to address or even measure. 
  • Lack of climate resilience. Failures to adapt to an increasingly extreme climate are directly tied to water infrastructure needs. From droughts to floods to wildfires, many leaders respond in real time and face enormous recovery costs, rather than planning in advance and striving for greater resilience over time.   

While federal agencies such as the Environmental Protection Agency and Department of Agriculture are overseeing initial IIJA funding flows and providing technical assistance, not every state, locality, or utility is evenly equipped to maximize the current moment. Without enough staff, matching funding, and other plans already on the books, disadvantaged communities—including localities that are often lower-income and slower-growing—may miss out. 

The opportunity to drive long-term change in the water sector 

The status quo of enriching the same places and pursuing the same projects needs to change. Federal and state agencies—alongside local utilities—need to move from reactive recipients of funding to proactive agents of change that use the variety of tools available to them to ensure that every community has access to safe drinking water and clean waterways.   

A proactive leader should identify necessary public health and environmental protection outcomes—especially for communities that need help the most—and then pursue the most important water infrastructure projects that would support those outcomes. Federal and state agencies in particular should work with the community and use funding, regulations, and enforcement to facilitate implementation accordingly. Whether it’s hiring and training staff, experimenting with new financing tools, or coordinating across multiple agencies and project types, federal, state, and local leaders can pursue a variety of actions to address long-standing barriers and achieve new outcomes across the water sector, such as: 

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Some of these actions are already taking hold. In New Jersey, the Camden County Municipal Utilities Authority used the SRF program to accelerate new plans and designs in recent years that significantly improved water quality performance, reduced flooding, lowered operating costs, and improved energy resilience. In fact, the operating cost savings from the infrastructure improvements, coupled with the extremely low interest rate and extended loan repayment periods via the SRF program, allowed these efforts to be accomplished without rate increases for customers. These types of locally led efforts demonstrate the transformational power of federal funding—it served as an important complement to pursue new priorities, get projects done, and ultimately achieve more collaborative solutions in service of short- and long-term water improvements.  

With the infusion of new IIJA funding, federal and state agencies, local utilities, and other interested stakeholders need to work together. They need to take proactive steps to ensure that water infrastructure funding is provided preferentially to those who need it most; ensure that projects are successfully implemented; and look beyond the next five years to identify the funding, institutional capacity, and regulation needed to help every person in every community across the country. 

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