A Look at the Financial Advantages of the One Water Approach
By Neil Grigg, Alexander Maas & Theresa Connor
Integrated “one water” programs can help cities overcome barriers, extract greater returns from infrastructure investments and increase livability. As a big tent to house different activities, one water offers to facilitate a transition from water service silos to a more flexible, holistic approach. As Rob Renner, CEO of the Water Research Foundation explains, one water is the future of the water industry, where “many benefits are realized when the barriers traditionally separating water, wastewater, stormwater and reuse are broken down.”
Water leaders have heard about one water programs, but the challenge is how to bring them about. The Urban Water Innovation Network (UWIN), supported by the National Science Foundation and based out of Colorado State University, is searching for winning strategies by studying integrated urban water programs in six regions across the United States. Stakeholders in all regions cite the need for more revenue to finance aging infrastructure and would like to see more financial officers involved in one water strategies and more line managers involved in financial strategies. Some of these strategies would address private entities in partnerships, triple bottom line assessments in financial reports, more flexibility in enterprise funds and a more flexible use of bond revenue for one water programs such as water conservation.
One water is a visionary concept, but local innovations in the financing of programs can open our eyes to new and feasible possibilities. UWIN researchers studied the cases reported by the Water Research Foundation, the Water Environment & Reuse Foundation and the US Water Alliance to search for promising financial innovations that might be applied more widely. Among those with a focus on financial issues, the study identified innovations that included pooling of funds by coordination and organization; grant programs; resource conservation (such as recycling and conservation); financing induced by regulatory mandates; and offsets created by corporate stewardship programs. Some programs can generate revenue, as in the case of sale of fertilizer generated from biosolids or collection of fees from firms that profit from resource conservation programs.
The cases showed that these innovations occur at basic and expanded levels of one water. At the basic level, they can facilitate integrated management of water supply, wastewater, stormwater and recycled water services, or what is meant by “Total Water Solutions,” a slogan used by the American Water Works Association. At the expanded level, one water promotes coordination in comprehensive urban planning such as the use of green infrastructure to enhance livability and support agricultural and environmental systems.
The one water concept opens new possibilities for pooling of funds, as shown by the cases involving coordination, cooperation and organizational approaches among multiple stakeholder groups. These can help with funding in several ways, such as financing through public-private partnerships (P3s), joint projects or organizational initiatives such as watershed utilities and stormwater programs. It takes patience to assemble partnerships, but the results can pay off.
As policy instruments, grant programs can nudge local policy toward integrated approaches. In some cases, state agency grants helped local government agencies implement one water programs. In other cases, grants from local government entities helped private entities such as property developers to implement One Water programs. The ability to leverage funds is important in reducing costs. Also, increasing visibility of the programs helps local governments and private entities alike get support for one water programs.
The San Francisco Public Utilities Commission (SFPUC) offers a grant program for developers to install onsite or district level non-potable water systems to recycle graywater, rainwater, blackwater or foundation water. This helps developers offset the additional costs of these systems and it helps SFPUC decrease potable water demands while developers gain visibility through their participation in the grant program. In Victoria, Australia, the state offers grants to local governments to implement one water programs. These grants encourage local governments to do more with their funds while improving state management of limited water resources.
Resource conservation includes water recycling, waste-to-energy, biosolid to fertilizer, and water conservation programs. Water recycling programs have generally come from two drivers; either water shortage conditions or increased requirements to discharge wastewater effluent. In southwest Florida, the Grizzle-Figg act limited the amount of nitrogen that could be discharged to the estuaries of that region. In response, many communities developed reclaimed water programs for irrigation as an alternative discharge method. In these communities, the reclaimed water will be paid for through wastewater fees.
In drought-prone areas of the United States (including Texas and California), water recycling is happening through potable reuse to address water shortage needs. In some communities, innovative water conservation programs have led to decreased demands, even with increased numbers of customers. Low flow fixtures and landscape conservation measures have been the biggest drivers. These results suggest that communities can decrease excessive landscape watering by changing to smart rate systems with tiered rate structures such that customers pay more for increasing usage. While increasing block rate structures encourage conservation, careful attention must be paid both in determining a rate structure which will cover costs and messaging that structure so that customers do not feel that they are simply paying more for less. Waste to energy programs can be financially beneficial to communities through reducing energy costs and reducing greenhouse gas emissions. Such programs are particularly beneficial for municipalities with stated carbon emission goals or “budgeting for outcomes” processes.
The regulatory case studies were mainly about combined sewer overflow (CSO) control programs and stormwater systems. In the 1990s, the U.S. Environmental Protection Agency (EPA) initiated a regulatory effort that limited the number of overflows that communities with combined sewers could discharge. Many communities responded by separating stormwater from the wastewater system or gained offsets by using green infrastructure to comply with the regulatory requirements. The addition of green infrastructure or CSO separation adds green space to the communities with co-benefits that include reducing urban heat island effects, reducing crime, increasing recreational opportunities, increasing property values and improving the livability of communities. Currently, most green infrastructure goes into rights-of-way, but partnerships with landowners will be needed as the programs expand to private land. In some instances, this may challenge traditional financial systems if public funds are spent on private properties. The regulatory driver to comply with eliminating CSOs has helped communities create the green infrastructure programs and move toward one water programs. The EPA may not be able to replicate the CSO regulatory initiative in the near future, but this initiative stimulated many innovative partnerships for green infrastructure programs.
The corporate cases show an added dimension of stewardship. The cases were Coca-Cola, with watershed improvements by a private company and Dow Chemical’s water reuse project. Water security is a growing concern for many corporations. To manage their supply chains, they are concerned about the future accessibility and cost of their water supplies. Evaluating their operations for water recycling opportunities can lead to cost savings and increased environmental stewardship. In addition to water recycling and watershed protection, corporations are also leading the way with concerns over how climate change will affect their ability to deliver goods and services to their customers.
An old proverb suggests that there are two meanings to the word crisis – danger and opportunity. Challenges facing water service providers that may lead to a crisis include climate change, aging infrastructure and escalating demands to do more with less. Water leaders who can take the long view and see opportunities in treating the water system as one system will find opportunities to add resiliency and livability to their communities. The one water paradigm is about breaking down silos to work with diverse partners to identify benefits and provide value to the community through new approaches to service delivery. This metamorphosis will challenge traditional regulatory, operating and financial systems, and bold approaches will be needed.
Cities are taking local approaches to different components of the one water paradigm and not trying to change everything at once. Leaders are building capacity in their operations to work outside of silos and with partners to evaluate best strategies for their communities. Because of versatility and variability across regions, local water managers are creating testbeds all over the country. From these case studies, we must learn which strategies are most effective in creating integrated, resilient water systems. Integration and partnerships to break silos and improve value are effective strategies to cope with challenges. An African proverb captures the idea: “If you want to go fast, go alone; if you want to go far, go together.”
Neil S. Grigg
Professor | Colorado State University
Neil Grigg is a professor of civil and environmental engineering at Colorado State University where he focuses on water infrastructure and management. He has also been head of the department and director of the Colorado Water Institute.
Alexander Maas
Assistant Professor | University of Idaho
Alexander Maas received his Ph.D. from Colorado State University where his research focused on residential and agricultural water issues. He has served on citizen advisory boards for municipal water utilities.
Theresa Connor
Project Development Officer | Colorado State University
Theresa Connor, P.E., is a part of Colorado State University’s One Water Solutions Institute connecting the world class research to real-world water challenges. She has also served as the utility director for Sarasota County, Fla., responsible for their water, wastewater, reclaimed water, stormwater and solid waste utilities.
