The Economic Benefits Of Investing In Water Infrastructure

4m ago
35 Views
0 Downloads
3.25 MB
40 Pages
Transcription

The Economic Benefitsof Investing inWater InfrastructureHow a Failure to Act Would Affect theUS Economic Recovery

About this ReportThe American Society of Civil Engineers (ASCE) partneredwith the Value of Water Campaign to commission thisstudy. It is part of ASCE’s Failure to Act series, whichbegan in 2011. It is one of five studies in the series thatASCE will release in 2020. Subsequent studies willaddress electricity, surface transportation, ocean ports,inland waterways, and airports. This study also builds onthe Value of Water Campaign’s 2017 study The EconomicBenefits of Investing in Water Infrastructure.About the American Society of Civil EngineersThe American Society of Civil Engineers represents morethan 150,000 members of the civil engineering professionin 177 countries. Founded in 1852, ASCE is the nation’soldest engineering society. ASCE stands at the forefrontof a profession that plans, designs, constructs, andoperates society’s economic and social engine—thebuilt environment—while protecting and restoring thenatural environment.To learn more: www.asce.orgAbout the Value of Water CampaignThe Value of Water Campaign educates and inspiresthe nation about how water is essential, invaluable, and inneed of investment. Spearheaded by top leaders in thewater industry, and coordinated by the US Water Alliance,the Value of Water Campaign is building public andpolitical will for investment in the United States‘ waterand waste water infrastructure through best-in-classcommunication tools, high-impact events, media activities,and robust research and publications.To learn more: www.thevalueofwater.orgAbout EBPEBP—formally Economic Development Research (EDR)Group—is a firm dedicated to advancing the state-ofthe-art in economic evaluation and analysis to supportplanning and policy in the areas of transportation, energyresources, urban development, and economic growthstrategy. Since its founding in 1996, EBP has helpedstate and local governments make infrastructureinvestment and economic development decisions thatsupport broad-based job creation, income generation,and overall prosperity. ASCE and the Value of WaterCampaign contracted with EBP to conduct this study.To learn more: www.ebp-us.com/enAbout Downstream StrategiesDownstream Strategies offers environmental consultingservices that combine sound interdisciplinary skillswith a core belief in the importance of protecting theenvironment and linking economic development withnatural resource stewardship. Within the water program,the company performs economic and policy analyses,provides expert testimony and litigation support, andconducts field monitoring.To learn more: www.downstreamstrategies.com

The Economic Benefitsof Investing inWater InfrastructureHow a Failure to Act Would Affect theUS Economic RecoveryAcknowledgements2Introduction3The US Water Infrastructure Gap9The Cost of Inaction19The Economic Benefits27Conclusion33The Economic Benefits of Investing in Water Infrastructure1

AcknowledgementsASCE and the Value of Water Campaign are grateful toan esteemed group of Value of Water Campaign supportersand ASCE members for their expert review of thedocument, including: Greg DiLoreto, P.E., retired, former CEO of Tualatin ValleyWater District Mami Hara, General Manager and CEO, Seattle PublicUtilities John Kmiec, Deputy Water Director, Tucson Water Kelley Neumann, P.E., Deputy Director, Planning andEngineering, Aurora Water Darren Olson, P.E., Vice President, Assistant DepartmentHead, Water Resources, Christopher B. BurkeEngineering, Ltd. Carolyn Peterson, Director, Communications and PublicAffairs, Association of Metropolitan Water Agencies Larry Pierce, P.E., retired, San Diego region Jim Schlaman, Director, Planning and Water Resources,Black & Veatch Amit Shah, Senior Manager, Evoqua Joe Szafran, External Affairs Manager, American WaterThank you to US Water Alliance staff Katie Hendersonand Katy Lackey and ASCE staff Anna Denecke andChristine Prouty for managing this project. Special thanksas well to Emily Feenstra and Alexa Lopez at ASCEand Radhika Fox at the US Water Alliance for theircontributions to this project.2Value of Water Campaign / ASCE

IntroductionThe American Society of Civil Engineers (ASCE) and theValue of Water Campaign release this report at a time whenthe COVID-19 public health crisis is causing economicdisruption at an unprecedented speed and scale in theUnited States. Workers are losing jobs by the millions asconsumer confidence, retail sales, and gross domesticproduct plummet. It is clear that the nation’s economicrecovery will be long and difficult. In the coming monthsand years, public officials at every level of government willconsider policies and investments to jumpstart economicrecovery. Investment in the nation’s aging water infra structure—composed of drinking water, wastewater, andstormwater systems—can spark a new era of job creationand economic growth while protecting public healthand improving the quality of life for families across theUnited States.Water is essential to every aspect of household andcommunity life and the economy. Dozens of industries, likemining, manufacturing, and health care, rely directly onwater and wastewater services to function. If they lostaccess to clean water supplies, the economic impact wouldbe acute. Meanwhile, the COVID-19 pandemic has shownthat the public health benefits from safe drinking waterand wastewater treatment are immeasurable. Much of thenation’s vast water infrastructure is buried undergroundor out-of-sight, but it is hard to overstate how vital thesesystems are for people’s health and the economy.Like so much else in the US economy, water utilities havebeen affected by the effects of the COVID-19 pandemic.Tourism and convention activities have canceled, sportsarenas have closed, hotels and schools have emptied,and many restaurants and bars have been operating atless than maximum capacity—all of which translatesto reductions in water consumption and rate revenues.It is uncertain when full economic activity will return.The American Water Works Association (AWWA) and theAssociation of Metropolitan Water Agencies (AMWA)estimate that drinking water utilities will experience anegative aggregate financial impact of 13.9 billion—or 16.9 percent—by 2021, due to revenue losses andincreased operational costs during the pandemic.1 TheNational Association of Clean Water Agencies (NACWA)estimates that the resulting financial impact on waste water utilities will be even higher, around 16.8 billion,including a 20 percent drop in sewer revenues.2The financial challenges water utilities face as a resultof the COVID-19 pandemic are layered onto chronic, longterm, and insufficient investment in the nation’s waterinfrastructure. Billions of dollars are needed each yearto renew and replace outdated pipes, pumps, storagefacilities, and treatment plants that ensure clean waterdelivers to homes and businesses across the nation,carry away and safely treat sewage and stormwater, andreturn treated water to rivers, streams, and other waterbodies. Local, state, and federal funding is meeting afraction of the current need. If this trend continues, thenation’s water systems will become less reliable, breaksand failures will become more common, vulnerabilitiesto disruptions will compound, and the nation will publichealth and the economy at risk.The Economic Benefits of Investing in Water Infrastructure3

This report details the cost to the nation’s economy ifcurrent investment trends in the nation’s water infra structure continue, and it explores the massive economicbenefits people would realize from fully funding thenation’s water infrastructure needs. The report is organizedin the following manner: The US Water Infrastructure Investment Gap sectionsummarizes the mismatch between the current spendinglevels and funding needs. The Costs of Inaction section analyzes the impact ongross domestic product (GDP), businesses, households,and public health if current investment trends in waterinfrastructure continue for the next 20 years. The Economic Benefits section describes the economicgains that could be realized over the next 20 years ifthe water infrastructure investment gap were closedand spending needs fully funded.The United States is entering what may be the deepesteconomic contraction since the Great Depression.3 As such,the policy and investment decisions that public officialsmake will have enormous consequences on the pace ofeconomic recovery. This analysis presents two verydifferent futures. If current underinvestment in watercontinues, businesses will become less competitive,household costs will increase, GDP will shrink, and publichealth may be at greater risk. If the United States actsboldly and closes the water infrastructure investmentgap, we will boost economic recovery, create jobs, fuelbusiness activity across a wide range of sectors, improvepublic health, and protect the environment.ASCE created the Infrastructure Report Card to assigngrades for the nation’s infrastructure based on condition,safety, capacity, and other factors. The most recent reportcard assigned drinking water and wastewater infrastruc ture a D and D , respectively. Closing the investment gapwould be equivalent to the nation’s water infrastructureachieving at least a “B” letter grade, reaching a state ofgood repair and posing a minimal risk, or an “A” lettergrade, a standard of resilience and capacity that is fit forthe future.DDrinking water infrastructure gradeaccording to ASCE’s most recentInfrastructure Report CardD Wastewater infrastructure gradeaccording to ASCE’s most recentInfrastructure Report Card4Value of Water Campaign / ASCE

Study MethodologyASCE and the Value of Water Campaign worked with aneconomic research team that included EBP, DownstreamStrategies, and the Interindustry Forecasting Projectat the University of Maryland (INFORUM) to develop thisanalysis. The researchers relied on a model called theLong-term Interindustry Forecasting Tool (LIFT), housedat University of Maryland’s INFORUM Group. LIFT is adynamic interindustry-macro (IM) model that uses macro economic data to examine how changes in one industrywill affect other industries and the entire economy.This study estimated the capital and operations andmaintenance (O&M) needs of water utilities and generated10-year and 20-year economic projections for thepotential consequences of two future scenarios: the first,continuing delay and underinvestment in water infra structure and the second, increasing investment in waterinfrastructure at levels that would close the chronicinvestment gap. The focus of this report is on the pipes,treatment plants, pumping stations, and other infrastruc ture that make up the nation’s drinking water, wastewater,and stormwater systems. This report does not addressdrinking water supply infrastructure beyond treatmentplants and distribution systems, such as source waterstructures like dams and levees.The economic analysis included two types of infra structure needs:1. Building new infrastructure to service increasingpopulations and expanded economic activity2. Maintaining or rehabilitating existing infrastructurethat needs repair or replacementThe report includes projections for both 10-year (2029)and 20-year (2039) time horizons. It bases the economicmodeling on the 2019 national economy and uses 2019dollars, so as not to reflect the economic impacts of theCOVID-19 pandemic. The study’s projections also do notreflect the financial impacts from climate change, thoughclimate change is expected to increase both the cost andthe urgency of water infrastructure investments.The full methodology can be found in this report’stechnical appendix, also available on the Value of WaterCampaign website.The Economic Benefits of Investing in Water Infrastructure5

What IsUS Water Infrastructure?The vast majority of US homes and businesses receivedrinking water, wastewater, and stormwater servicesthrough a network of treatment plants, pumps, pipes,storage facilities, and other assets operated by both publicand investor-owned utilities. In this study, we refer tothese structures and facilities as “water infrastructure.”Every day, more than 50,000 drinking water systemsdistribute 39 billion gallons of potable water—drinkingwater—to US homes, industries, and other businesses.4US Environmental Protection Agency (EPA) and stateagencies under the Safe Drinking Water Act, which requiresEPA to establish standards for contaminants that couldcause negative health effects, regulate these systems. Mostpeople living in the United States receive drinking waterfrom a water utility, either public or investor-owned.Surface water systems, including rivers and lakes, serveapproximately two-thirds of US residents, and groundwatersystems serve one-third. Over 13 million householdsrely on private wells for drinking water, which EPA doesnot regulate.5In addition, approximately 15,000 wastewater utilitiesserve 75 percent of the US population.6 These systemscollect and treat approximately 32 billion gallons ofwastewater daily before returning it to the environment.7Some of these systems also manage stormwater services.EPA and state agencies under the Clean Water Act,which sets ambient water quality standards for wastewaterthat flows out of a treatment plant, sewer, or industrialoutfall, regulate wastewater systems. Over the last fewdecades, the reuse of wastewater through advancedtreatment has become more common.8 Public wastewatersystems do not serve about 19 percent of US households,which instead depend on septic tanks.Large portions of US water and wastewater systems werebuilt over a century ago. As pipes, plants, and pumpsreach the end of their expected lifespan, they need to beupgraded, replaced, or fortified. In addition, manysystems are not equipped to meet the new demands theyface today with growing populations, increased treatmentrequirements,