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Water is Critical to Our Economy

2013 November 5
Nancy Stoner

November 5, 2013
9:51 am EDT

When it comes to supporting the economy by spending money on water-based tourism, I do my share. Like most Americans, I love swimming, fishing, boating and even just hanging out by lakes, streams and beaches in the summertime. This past summer for example, I spent a weekend on the Delaware shore; a week in Wyoming hiking and fishing in pure mountain streams; and a week in New York swimming in the state park beaches. None of that comes cheap – but it is well worth it because I will remember these family vacations forever and my children will as well.

Water is also vital to a number of other economic sectors. Water is used to extract energy and mineral resources from the earth, refine petroleum and chemicals, roll steel, mill paper, and produce uncounted other goods, from semiconductors to the foods and beverages that line supermarket shelves. Water cools the generators and drives the turbines that produce electricity, and sustains the habitat and fish stocks that are vital to the commercial fishing industry. Rivers, lakes, and oceans provide natural highways for commercial navigation. Every sector of the U.S. economy is influenced by water.

Here at EPA, we have studied this issue more closely and are releasing a report on the Importance of Water to the U.S. EconomyThis report is intended to help raise the awareness of water’s importance to our national economic welfare and to summarize information that public and private decision-makers can use to sustainably manage the nation’s water resources.  The report’s main findings:

Water is absolutely fundamental to the U.S. economy
Energy production, food production and water supply account for 94 percent of withdrawal from the nation’s groundwater, streams, rivers and lakes. All parts of the economy are directly or indirectly dependent on energy, food and water supply, so changes in one part of the energy-food-water nexus can impact the others and have a ripple effect through the whole economy.

Water value and competition will rise
Available data does not reflect water’s true worth in the economy. For example, pricing does not usually reflect the marginal value enjoyed by Americans in having safe tap water available from community water systems 24 hours a day, which is a benefit that many citizens in other countries do not enjoy.  As a result of water being undervalued, current use may be inefficient and unsustainable. Also, competition for water will increase as consumption rises, water quality decreases, and the impacts of climate change are felt.

Decision-makers in the private and public sectors need more information
Increased demand for information on reducing water-related risks is growing in the private sector. More robust data and tools could be valuable for decision-making by public water systems and water management agencies. Generating better data and tools will require collective efforts and research by all stakeholders.

EPA hopes this report will be a catalyst for a broader discussion about water’s critical role in the U.S. economy. I encourage you to leave comments below, share your thoughts through Facebook and Twitter, and send email to

Nancy Stoner is EPA’s Acting Assistant Administrator in EPA’s Office of Water. Since February 1, 2010, Nancy Stoner has been serving as the Deputy Assistant Administrator for Water. Ms. Stoner’s extensive career in environmental policy and law began in 1987 as a trial attorney in the Environment and Natural Resources Division of the U.S. Department of Justice. Most recently Ms. Stoner served as the Co-Director of the Natural Resources Defense Council’s (NRDC) Water Program. Ms. Stoner is a 1986 graduate of Yale Law School and a 1982 graduate of the University of Virginia.

Editor's Note: The views expressed here are intended to explain EPA policy. They do not change anyone's rights or obligations.

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13 Responses leave one →
  1. B. Fewell permalink
    November 5, 2013

    Water is what makes the world go round – and our economy. Great report. Thanks EPA Office of Water and Nancy for posting this useful report, which I’ve amplified on my blog.

  2. Dick Champion permalink
    November 6, 2013

    Great comments Nancy! Thank you and EPA for starting the conversation. Take care!


  3. E. Davis permalink
    November 7, 2013

    I think Ms. Becker and the EPA have taken a small first step towards recognizing the true cost and value of water in the American economy; however, there is much lacking about their study. I recognize that the EPA is restricted in its movements and that general statements are the simplest ways to get conversations started. But the EPAs statements about the value of water fail to address the importance of communicating these ideas to key groups and implementing education about the value of water to residents and businesses.

    As the environmental movement has turned more and more towards the idea that individual choices can make a difference, there is less focus on large, organized movements to implement change. This is where the EPA should move to make a difference – supporting state plans for smart water usage and using the techniques already implemented by some cities to conserve water. Widespread water reduction and shifting away from combined sewers towards separated systems in which treated, clean water is used for things that require it, rather than everything (toilets and garden hoses included), and gutter water or runoff is reused or stored. The possibilities are endless.

    What is clear is that there needs to be a nationwide shift in how we approach water. Considering it as a valuable resource we are lucky to have can move people towards becoming more willing to pay the true price for the energy that goes into the treatment and capture process. American consumption has brought us into an extremely productive and rich economy, but what consumers don’t realize is the amount of energy and resources which go into seemingly simple things – water, for one, is involved in everything, as the EPA has declared, and it may come to a point in which the consumer has to decide if we would rather use water for gas extraction or drinking.

    I only hope the choice will be easy and made by individuals rather than pressure from lobby groups. This shift, through consumer education as well as increased education about resource use in schools, can help us move towards smarter use and far less waste. However, it is reliant on a bolder stance and making our resource use an important topic, which is seemingly impossible in an age of a highly divided political groups, educated on and using ideas as facts.

  4. Alexandra Nawrot permalink
    November 7, 2013

    It is disappointing to see that such an obviously critical resource lacks any substantial valuation. Even this report – printed in 2013, does not cite any concrete methods by which to put water in an economic perspective.
    Although the report may raise awareness by adding to water resource management literature, there is no real urgency in the message. Yes, water is critical to all aspects of the economy, and yes, it is a very complex system to value; but where will the government draw the line? Industrial use of water resources is not transparent and without any real fiscal pressure placed on consumptive uses of water no real change will occur. I’d like to know how potable water needed for basic drinking, sanitation, and hygiene will be compared with water prices for industrial uses.
    I understand that quality and quantity will be taken into consideration, but water as a basic human right cannot exceed a certain price, while water for the production of non essential goods can be more flexible.
    You also mention that water is a local resource but then go on to cite a majority of examples of ‘off-stream’ uses. These are arguably non-local. The fluidity and variable structure of water as well as the journey from its source which may be hundreds of miles away make water resources an interconnected system that is not “local” at any point. Therefore the “systems-level” approach is indeed critical.
    On that note, a water utility’s jurisdiction is often dictated by an arbitrary boundary that conforms to politics rather than geography. Connections between cities are limited physically by pipe systems and politically by competing agendas. Emphasis should be placed on the connectivity of interested parties in a way that does not slow down the decision making process but rather facilitates it by providing as much relevant information as possible.

    • B Petkov permalink
      November 9, 2013

      Alexandra makes a few very important points. Our perception of the value of water cannot be limited to strictly a situation by situation basis. Yes, issues surrounding accessibility and quality of water are unique in each case, but that does not mean that the water stays within the boundaries of that system. In a way, the EPA’s report on the Importance of Water on the US Economy touches on this by addressing the complex web of interaction in the major business sectors and how it affects this precious resource. And it is truly important to keep that complexity in mind as climate change and increased development continues to stress water to the point where we have no choice but to attempt to ascertain the true value of water, so that people and the economy can adapt to a sustainable water use model.
      As we adapt and develop our knowledge of the value of water, we must, as Alexandra mentioned, aim to keep access to clean water as a basic human right. The most difficult task that we face is using our understanding of the interconnectedness of water and all aspects of life and finding a way to achieve clean and sustainable water without crippling the US let alone the global economy. While access to water for people is the utmost important, it is vital that we tread carefully as water-shocked (be it from rapid price increases or environmental catastrophes) economic sectors could result in a significant delay in finding a solution to our water problems. This is where the ideas that the EPA puts forward must be developed much further. Simply stating the complexity is not enough. We must act with both care, urgency, honesty, and responsibility to obtain a more concrete understanding of what water costs, and what we must do to protect it. In the long run, no one profits from lack of clean water.

  5. Anonymous permalink
    November 10, 2013

    If one reads the EPA article on ‘The Importance of Water to the U.S. Economy’, you really get a sense of the effects which water can have and the opportunity costs related with how we deal with our economy.When looking at water on such a huge scale (the U.S. economy) one must remember to look at it in relation to other resources that could and have an effect on the economy (notably: petrol, natural gas and electricity).

    The EPA article is only one of the many articles which predict an increase the demand for water. Water has such a huge amount of potential and importance to our key survival that we take it for granted (just as we take oxygen for granted). The fact that water could replace any of the other resources that affect our economy surely gives it the possibility of having a huge effect on the economy, especially as its demand increases.

    At the moment, the general attitude towards water and its potential (whether it be positive or negative) is very short term. People talk of the 100 year storm, but base their expectations on the past. However with weather systems changing due to climate change, the benchmarks are constantly changing; what would have been considered a 50 year storm is now seen as a 10 year storm etc. It is inefficient, financially wasteful and irresponsible to take an attitude of ‘we’ll deal with it when it becomes a more imminent threat’. Furthermore, we are not harnessing water’s potential. The attitude is ‘why invest in something new when we seem to be dealing just fine with what we already have.’ However, as our energy sources start to run out and our environment changes more dramatically, we will be forced to deal with the matter at hand. Changes are becoming more dramatic and we need to take more anticipating measures to deal with the future. The world is changing at an ever increasing speed and it is imperative that we modify are view on resolutions that will deal with future scenarios.

  6. J. Kulp permalink
    November 11, 2013

    I would have to agree with some of the previous responses that the EPA’s report is just scratching the surface of the importance of water and its value. I feel that the report needs a bit more substance to it if the intent is to assist industry decision makers on choices about their water use practices. By showing that these industries and our economy are all interconnected by their water dependence is a good start. But, what the report did not address is why the industries that do not see a direct impact of their business yet should change their water use practices. Or if they do see and impact, how can they start to use that to educate other sectors that have not yet been affected.
    The report does point out that extensive data on water use needs to be collected to begin to show its value and use by each industry. I think this is true but simply pointing out the water needs is once again just the first step. Further could have been discussed with a little more detail such plans for cross sector collaboration for water use reduction. These are just some of the things I would be looking for as an industry decision maker.

  7. E. Tischler permalink
    November 11, 2013

    The EPA’s release of a synthesis report on the Importance of Water to the U.S. Economy is highly relevant and much needed. Decision makers, policy writers, industry leaders, etc. must understand the importance of water in order to ensure its sustainable use. As the synthesis report explains, early and often, “the entire economy directly or indirectly relies upon the output of industries for which water is a critical input.” It’s not just a critical input; it’s the critical input. The energy-water-food nexus, exemplifies the interconnectivity of our reliance on water as an ecosystem service. The synthesis does good to introduce an overview of water’s importance to the U.S. economy, though it falls short at directing any “ongoing dialogue with technical experts, stakeholders, and decision makers.”

    Perhaps the synthesis report could’ve gone further by providing specific examples of research methods regarding water valuation or ecosystem services valuations. Presenting case studies concerning progressive water management, market-based payment schemes, or theoretical policy measures creating water-use incentives certainly would create a dialogue capable of moving this discussion forward. While the report briefly mentions what DOI is doing with its WaterSMART Initiative, it would be useful to know what other agencies (NOAA, USDA, USGS) are doing concerning water’s importance to the U.S. economy. Concrete recommendations for the private sector would seem to be a key component of a report such as this, yet any sort of recommendations are few and far between. With the release of the synthesis report, it is clear that new considerations must be taken and better-informed decisions must be made. Yet it remains unclear what those considerations will be and how to better inform our decisions.

  8. Kaylan Dorsch permalink
    November 11, 2013

    I appreciate that this report brings to light to some basic knowledge about water and its value to our nation. It highlights that water is essential to human life, which I believe is one of the most critical and inescapable things for us all to understand. It is the one natural resource that we need to survive, but ironically the one that is totally undervalued. It also brings attention to the energy-water-food nexus and how the majority of our withdrawal is for industrial purposes- the biggest being thermoelectric and agriculture. Industry would crumble without the availability of and access to water, but at no point in the supply chain are we willing to pay the fair price of water.

    If all this article means to do is to bring attention some attention to these issues, then it has done the EPA has done its job. However, I feel that it is rather passive and is by no means a real call for action. It timidly acknowledges that we many need to make some changes to how we manage our water resources going forward. But the truth is we need to light fires around this issue and make some tangible changes to our water management plans both locally and nationally. And the only way to do that may be to through our pocketbooks. When we pay a fair price for water that truly reflects it vital importance to our lives and to our economy, maybe then we will realize its true value.

  9. Kandyce Perry permalink
    November 11, 2013

    Like some of my other classmates have stated, the EPA report only begins to start the discussion on the importance of The EPA does a good job of explaining the sometimes-elusive interconnectedness of water in the report. It talks about industries that use water that are not usually analyzed and discussed. With more attention placed on these water intensive industries, more efforts can be put in place to ensure these industries are being more water responsible.

    In the future, I would like to see the EPA release annual reports that provide updated information. The report talks about how more information is needed in able for specific sectors and industries to make better water decisions. Surely as more research is done in the future, more information will be available.

    Lastly, I would like to see the EPA provide some examples about what is currently being done by cities and businesses to protect source water, conserve water, and accurately reflect the true cost of water. The EPA is an authority in environmental stewardship. Leaders lead by sharing lessons with their followers. The EPA has many partnerships with many entities and has secured some best practices over its leadership. It is only right that the EPA firsthand disseminates some of that knowledge. The EPA has an influence in this country that has the potential to really affect change. I would argue that that influence is not being used to its greatest potential.

  10. Alexy Abelanet permalink
    November 12, 2013

    I actually have a completely different approach to this report compared to most of you (from what I am reading on the previous blog posts). The report’s goal was to discuss the “importance of water” and the key factors that should influence its valuation and I actually think they did a pretty good job of doing that. Keep in mind also, this is the “synthesis report”. Though I would agree that there was obviously no clear method outlined to put a price tag on water, all the ideas were there.

    Indeed, the idea of this report is that the notion of pricing water according to volume used/extracted is absolutely obsolete. We can no longer base our models and predictions on what we thought was an appropriate use without considering location (i.e. Philadelphia vs Jerusalem for example), reliability (with regards to climate change, possible droughts and increased demographics), time (what extraction rates allow for sufficient replenishing of water source —> see resilience level of body of water) and quality (not only current state of water purity but also possible risk of pollution).

    One entity that has already done a great job coming up with a formalized method to value water effectively according to these conditions is Veolia, a multinational french energy and utilities company. They have created a Water Impact Index (see this great video to see how they do it to effectively make decisions in terms of water management and usage and apply it in every major business decision they make.

    What is left to do then? In my mind, it is going to be up to companies themselves to take all the info contained in this report and start integrating/internalizing the value of water within their business models. I don’t think there is ONE way to do this however as every industry/company has different interests and uses for water but whether they like it or not, the stress on this valuable resource is only going to increase and this will have to come into play.

    Coca-Cola is very conscious of this, and so are other large beverage companies meaning that valuing water is starting to also be a concern for companies not directly linked with managing water. I am convinced that soon, this will be a global business concern and valuing water will be a key part of management in the future.

  11. M Shostek permalink
    November 12, 2013

    One of the biggest issues in environmentalism is the acceptance of progress. For a while, the EPA has relied on measures and regulations that were introduced in the 1970s. These regulations are an essential foundation, but without adequate passage of laws more relevant to the issues that plague us today (climate change, etc.), we cannot fully tackle these issues. The report was an interesting read, commencing with the fact that water is a finite resource, then evolving into a discussion of its economic value. Therein may lie the problem of looking at water in a more economic means rather than balancing it with that of a human right. Then again, access to water in the US has become more of an issue over time (Oklahoma droughts, pollution from Katrina, etc.). The report mentions water’s involvement in processes such as agriculture and mining, but only says that the “output is influenced by activity in others,” rather than stating what the issue is with this overabundance of water. Utilizing increasing rates of water can help to put a cap on how these industries which can be overly wasteful to this resource will help us converse and reuse more water.

    The mentioning of companies frequent turn over to the Global Reporting Initiative is a key factor in ensuring that companies are held accountable for the amount of waste generated and their environmental footprints- with water being a heavy usage of this. Is “protecting and managing our water resources is essential to maintaining a strong, vibrant economy?” Or are the social and environmental factors the report glazes over really not a factor in key decision making by the EPA? I think a fundamental change needs to address these areas more with the heightened issues of climate change. The report does a good job of this with its Sustainability Risk Index, but unfortunately this is only a page of the report. Kilvana, Alaska is going to be underwater by 2025. How can we conserve water here in order to ensure the sea level does not rise that much from waste water and storm water that flow into our watersheds? Governor Tom Corbett wants to utilize old acid mine drainage for hydraulic fracturing…..clearly water is overvalued, and the need to pollute this water or pollute even more fresh water is something that is not alarming or a priority to us.

    I think the EPA truly needs to re-evaluate the priorities of addressing these issues in order to make efficient process in this matter of the “value” of water. While it is nearly impossible to quantify, by incorporating these social and environmental factors we can truly get a better estimate as to what the “true cost” is.

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