Water Infrastructure Investments

Aging and deteriorating water systems threaten economic vitality and public health
By Susan N. Story

Water is the essential underpinning of our society. It’s not only for drinking, cooking and cleaning; it’s for fire protection, manufacturing, business and industry, and overall economic vitality. Allowing water and wastewater systems to continue to deteriorate is putting our society at serious risk.

In the U.S., water services are often so reliable that many of us do not think twice about what comes out of our faucets or what it’s been through to become safe enough to drink. Our daily lives, communities and economy depend on functioning infrastructure. All across America, communities are faced with massive challenges to replace critical water and wastewater infrastructure, including treatment facilities and underground pipes.

The American Society of Civil Engineers most recently gave America a D rating in terms of infrastructure, citing dilapidated roadways, insufficient water systems and “a pressing need for modernization.” The group estimates $3.6 trillion would need to be invested into U.S. infrastructure by 2020 just to raise the country’s support systems to acceptable levels.
I recently co-chaired, with S&P Global CEO Doug Peterson, the Bipartisan Policy Center’s (BPC) Executive Council on Infrastructure. In May the Council released a report calling for a major culture change in how the United States approaches infrastructure projects.

The report, Bridging the Gap Together: A New Model to Modernize U.S. Infrastructure, lays out a vision for increasing public-private partnerships and private capital in projects like water and wastewater systems, ports, roads and bridges, and provides a roadmap to overcoming the barriers that discourage and even prevent the public and private sectors from working together.

When we talk about the aging infrastructure in our country, it’s important to keep in mind that upgrading the vast and complex systems is not the sole responsibility of any one group, organization or entity. We know that no sector, whether public or private, can solve the nation’s water challenges on its own.

With an estimated 650 water main breaks occurring every day, and two trillion gallons of treated water lost to leaks or breaks every year at a projected cost of $2.6 billion, aging and deteriorating water systems threaten economic vitality and public health. The need to reverse years of underinvestment in infrastructure, despite tighter budgets at every level of government, calls for us to rethink how we pay for and manage infrastructure investment.

With crumbling infrastructure and severe financial constraints, a growing number of states are passing legislation that sets the stage for Public-Private-Partnerships (PPPs), where private-sector water companies assist in the design, rebuilding, operation or even transfer of ownership of water and wastewater systems. PPPs bring private sector capital and management expertise to the challenges of modernizing and more efficiently managing such infrastructure assets.

By partnering, public and private stakeholders can reduce the fiscal burden on public sector balance sheets, transfer risks, and enable government agencies to focus on their top priority – ensuring their community’s health and safety. Together, the public and private sectors can establish a new model for investing in infrastructure through the core principles and actions proposed in the council’s report, coupled with new funding sources and financial tools.

Also, working with the private sector to deliver infrastructure can reduce costs, both in the short-term – by transferring the risk of cost overruns during construction to the private partner – and over the long-term, by aligning incentives to achieve cost-effective decisions and to ensure that adequate maintenance is performed.

Reliable infrastructure goes hand-in-hand with the safety and quality of drinking water. Since water is the only utility product that customers ingest, it has direct health implications. American Water is celebrating our 130th birthday this year, and we have deep and wide expertise in water supply options, treatment, distribution and customer service. Beyond delivering water quality that was 13 times better than the average industry compliance in 2015, American Water to date has received more than 65 Environmental Protection Agency awards for voluntarily surpassing drinking water standards.

After investing $1.2 billion in infrastructure investments in 2015, American Water will spend $5.5 billion in investments that include pipe replacement, capacity expansion, and investment in water and wastewater infrastructure to continue to meet regulatory requirements.

Susan N. Story is the president and CEO of American Water, the largest publicly traded U.S. water and wastewater utility company. She may be reached at
www.amwater.com

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