Investing in America’s Water Infrastructure – Answering the “How to Pay?” Question

By Jim Gebhardt, CFA

Clean and reliable water is critical for life and, as our Administrator recently said, “needs to be available to everyone—no matter what part of the country you live, no matter how much money you make, and no matter the color of your skin.” Yet, despite the notion of water as an inalienable right and that most Americans value well-run drinking water and wastewater delivery systems, communities across the country continue to struggle with setting up adequate and sustainable revenue structures required to support needed infrastructure investment and system management.

That’s why we launched our Water Infrastructure and Resiliency Finance Center last year to explore leading-edge solutions to funding and revenue challenges, and identify and support best practices.

As I blogged about earlier, EPA’s Clean Water State Revolving Fund and Drinking Water State Revolving Fund has provided more than $141 billion in low-interest loans to state and local water infrastructure projects since 1987. Today these state-run programs operate with almost $60 billion in program equity that will continue to be available to support sustainable lending programs.

Looking ahead, we see lots of opportunities for states to support market-based solutions that address stormwater mitigation challenges, source water protection, on-site wastewater management, and marketplaces for nutrient pollution credit trading. It’s also encouraging to see some states exploring how their triple-A credit rating can be used to guarantee debt and provide additional credit access to stimulate these kind of water quality investments.

But we aren’t stopping there.

We’re looking at emerging and promising finance mechanisms that address water quality and quantity challenges such as Pay for Success, Pay for Performance, green bonds, energy and water performance contracting, water quality trading, and conservation financing strategies.

We’re researching procurement and funding strategies associated with public-private and public-public partnerships in the water sector.

We’re working with the Environmental Finance Center at the University of North Carolina to develop public-private and public-public project (P3) profiles and an evaluation tool to help local officials determine if there is value in pursuing P3 opportunities in their community.

We’re busy developing a water finance information clearinghouse. The first portal will provide up to date information on stormwater management frameworks, funding and revenue solutions. We plan to launch the portal this fall.

No matter where you live, we are here to help. We also invite you to attend one of our upcoming engagement opportunities:

EPA Twitter Chat: On July 27 at 2 pm EST EPA experts will be answering your water infrastructure finance questions. Direct your questions to @EPAwater and use the hashtag #WaterFinance.

Environmental Financial Advisory Board meeting: On August 9 and 10 the Environmental Financial Advisory Board will meet in Denver, Colorado, to discuss ideas and advice to provide EPA on ways to lower the costs of and increase investments in environmental and public health protection.

Regional Finance Forums: EPA’s Water Infrastructure and Resiliency Finance Center will continue hosting regional forums across the country to bring together communities with water infrastructure financing needs to network, hear local success stories from peers, and have an opportunity to meet key regional funding and technical assistance contacts. Check out our website for upcoming dates and locations.

About the author: Jim Gebhardt is the director for EPA’s Water Infrastructure and Resiliency Finance Center. The Center identifies financing approaches for public health and environmental goals by providing financial expertise to help communities make better-informed decisions about drinking water, wastewater, and stormwater infrastructure.

Editor's Note: The views expressed here are intended to explain EPA policy. They do not change anyone's rights or obligations. You may share this post. However, please do not change the title or the content, or remove EPA’s identity as the author. If you do make substantive changes, please do not attribute the edited title or content to EPA or the author.

EPA's official web site is www.epa.gov. Some links on this page may redirect users from the EPA website to specific content on a non-EPA, third-party site. In doing so, EPA is directing you only to the specific content referenced at the time of publication, not to any other content that may appear on the same webpage or elsewhere on the third-party site, or be added at a later date.

EPA is providing this link for informational purposes only. EPA cannot attest to the accuracy of non-EPA information provided by any third-party sites or any other linked site. EPA does not endorse any non-government websites, companies, internet applications or any policies or information expressed therein.

The Time to Invest in America’s Water Infrastructure is Now

By Jim Gebhardt, CFA

Communities across the country are facing the immediate challenges of aging and inadequate drinking water and wastewater infrastructure. Most of our country’s underground water infrastructure was built 50 or more years ago, and in some older cities, water mains are a century old. The implications of deteriorating infrastructure can be felt nationwide— each year our country experiences about 240,000 water main breaks, $2.6 billion is lost as our water mains leak trillions of gallons of treated drinking water, and billions of gallons of raw sewage are discharged into local surface waters from aging sewer overflows.

Despite significant federal, state, and local expenditures, infrastructure investment has fallen short. Further, the cumulative investment gap is expected to widen substantially over the next 20 years with federal investments occupying a smaller space. EPA’s Clean Watershed Needs Survey and Drinking Water Needs Survey show that over $655 billion dollars in water infrastructure is needed over the next 20 years to keep pace with projected investment needs.

Over the years EPA’s Clean Water State Revolving Fund and Drinking Water State Revolving Fund have both been very successful at addressing important water quality and public health needs of communities across the country. With these funds we have supported state and local water infrastructure investment that provides essential services and reduces pollution in our waterways.

While our state revolving funds have been highly successful, there are still too many communities facing infrastructure challenges caused by inadequate revenue and investment.

That’s why in 2015 we launched EPA’s Water Infrastructure and Resiliency Finance Center to identify and promote best management practices that can help local leaders to make informed decisions for drinking water, wastewater, and stormwater infrastructure that are consistent with local needs. The Center promotes the effective use of federal funds, identifies new approaches for procuring infrastructure services and capital investment for local and state governments, and employs strategies that can better serve small and lower income communities.

To explore the unique funding and financing challenges of these communities, EPA will be hosting a national convening on July 19 in Washington, DC, where state, local, and federal leaders will share best practices in coordinating funding and showcase innovative local financing solutions. I’m confident that the robust representation of states, utilities, NGOs, academics, and others will produce meaningful and productive conversations and solutions. Watch for a blog that details the conversations and next steps from the event.

The time to act is now.

About the author: Jim Gebhardt is the Director for EPA’s Water Infrastructure and Resiliency Finance Center. The Center identifies financing approaches for public health and environmental goals by providing financial expertise to help communities make better-informed decisions about drinking water, wastewater, and stormwater infrastructure.

Editor's Note: The views expressed here are intended to explain EPA policy. They do not change anyone's rights or obligations. You may share this post. However, please do not change the title or the content, or remove EPA’s identity as the author. If you do make substantive changes, please do not attribute the edited title or content to EPA or the author.

EPA's official web site is www.epa.gov. Some links on this page may redirect users from the EPA website to specific content on a non-EPA, third-party site. In doing so, EPA is directing you only to the specific content referenced at the time of publication, not to any other content that may appear on the same webpage or elsewhere on the third-party site, or be added at a later date.

EPA is providing this link for informational purposes only. EPA cannot attest to the accuracy of non-EPA information provided by any third-party sites or any other linked site. EPA does not endorse any non-government websites, companies, internet applications or any policies or information expressed therein.