$202.5 Billion Needed For Wastewater Management For 20 Years

Jan 16:A new report from U.S. EPA estimates $202.5 billion is the nationwide capital investment needed to control wastewater pollution for up to a 20-year period. Delivered to Congress this week, the 2004 Clean Watersheds Needs Survey summarizes the results of the agency's 14th national survey on the needs of publicly owned wastewater treatment works (POTWs). The estimate includes $134.4 billion for wastewater treatment and collection systems, $54.8 billion for combined sewer overflow corrections, and $9.0 billion for stormwater management. Assistant Administrator for Water Benjamin H. Grumbles said, "Water infrastructure is a lifeline for health and prosperity in communities across America. EPA is working with our partners to promote sustainable solutions and help utilities and households save money, water and energy."

EPA said communities across the country face challenges in sustaining their water infrastructure. EPA is working with states, tribes, utilities, and other partners to reduce the demand on infrastructure through improved asset management, improved technology, water efficiency, and watershed-based decision making, and is working with Congress to enact the Administration's Water Enterprise Bond proposal.

The report provides information to help the nation make informed decisions about pollution control needs necessary to meet the environmental and human health objectives of the Clean Water Act. The figures represent documented wastewater investment needs, but do not account for expected investment and revenues. Wastewater treatment utilities pay for infrastructure using revenue from rates charged to customers and may finance large projects using loans or bonds. State and federal funding programs, such as EPA's Clean Water State Revolving Fund program, are also available to help communities meet their wastewater pollution control needs. The needs in this survey represent a $16.1 billion (8.6%) increase (in constant 2004 dollars) over the 2000 report. The increase in overall national needs is due to a combination of population growth, more protective water quality standards, and aging infrastructure.

The largest reported total publicly owned wastewater treatment works needs, both more than $20 billion, occur in New York and California. Florida, Illinois and Ohio each have needs in excess of $10 billion. The States with the largest needs per capita are the District of Columbia ($3,670), Hawaii ($1,660) and West Virginia ($1,400). Over three-fourths (76.8 percent) of the total needs reported are concentrated in 18 States; 20 States each reported less than 1 percent of the total needs.

In terms of providing funding for wastewater treatment needs, the CWSRF is one of many supplementary Federal, State and local funding sources. From July 1, 2000, through June 30, 2004, EPA provided an annual average of $1.3 billion in grants to State CWSRF programs to assist with point and nonpoint source pollution control needs. In the same period, States combined these CWSRF funds with State matching funds, bond proceeds and loan repayments to provide assistance, mostly in the form of loans, of approximately $4.4 billion per year to local communities. The gap between facilities’ funding and their total needs is addressed not only by other Federal, State and local funding sources, but also is expected to be increasingly addressed by activities related to EPA’s Sustainable Infrastructure Initiative.

In response to the EPA’s Gap Analysis and other recent 20-year estimations of wastewater treatment needs, the EPA Administrator convened a forum in January 2003 -- Closing the Gap: Innovative Responses for Sustainable Water Infrastructure. Using input from industry, government and academia obtained through this forum, EPA developed the Sustainable Infrastructure Initiative. The goal of the initiative is to reduce the infrastructure funding gap through a four part strategy focused on advanced facility management practices, water efficiency promotion, full-cost pricing and a watershed management approach.

In testimony before Congress, EPA Administrator Johnson has described the Water Enterprise Bond proposal as follows. "EPA has worked with Treasury and other parts of the Administration to propose expanded use of tax-exempt Private Activity Bonds for capital investments in drinking water and wastewater projects. The President’s Budget proposes to exempt PABs from the private activity bond unified state volume cap. PABs are tax-exempt bonds issued by a state or local government, the proceeds of which are used by another entity for a public purpose or by the government entity itself for certain public-private partnerships. By removing drinking water and wastewater bonds from the volume cap, this proposal will provide states and communities greater access to PABs to help finance their water infrastructure needs and increase capital investment in the nation’s water infrastructure.

"This Water Enterprise Bond proposal would provide an exception to the unified annual State volume cap on tax-exempt qualified private activity bonds for exempt facilities for the 'furnishing of water' or 'sewage facilities.' To ensure the long-term financial health and solvency of these drinking water and wastewater systems, communities using these bonds must have demonstrated a process that will move towards full-cost pricing for services within five years of issuing the Private Activity Bonds. This will help water systems become self-financing and minimize the need for future subsidies."

Access a release from EPA (click here). Access EPA's Clean Watershed Needs Survey website for additional information and background documents (click here). Access links to the 166-page complete report, individual sections, appendices and a summary of findings (click here). Access Congressional testimony on the Water Enterprise Bond proposal (click here). [*Water]