Report: U.S. water systems are consolidating slower than needed

aerial view of water plant

A recent report from the Environmental Policy Innovation Center (EPIC), a Washington, D.C.-based nonprofit, says the consolidation of water systems in the United States is happening at an extremely slow pace. While stronger state policies on consolidation are already coming on line, the EPA should prioritize a new policy to incentivize more progress, the report says. 

Consolidation and sharing services is regarded as a beneficial strategy to improve public health, seeing as how thousands of small utilities across America can struggle to maintain infrastructure, finances and drinking water treatment standards.

EPIC notes that more than half of the country’s 50,000 community water systems serve less than 500 people. Because these smaller systems disproportionately serve rural and lower-income populations, issues of health equity are inextricably linked to consolidation, the group says. 

To evaluate the consolidation and shared services of systems, EPIC analyzed deactivation dates listed within the EPA database, Safe Drinking Water Information System (SDWIS). The report found that there is a decline in the number of utilities by approximately 0.6 percent per year over the past three decades. Unfortunately, there is no data to show any trends in shared service arrangements.

“As a country, we are flying blind – it’s impossible to get a picture of how much progress is happening to eliminate the health risks inextricably tied to small utilities,” says Jessie Norriss, the report’s lead author and a senior policy analyst at EPIC. “You’ve heard of ‘too big to fail,’ in water we have too small to succeed.” 

To accelerate water system consolidation, the report makes the following recommendations: 

  • Finalize EPA’s Water Restructuring Rule. We need a national rule that puts stronger federal scrutiny on struggling utilities and encourages states to establish stronger incentives or requirements for consolidation of utilities that consistently violate public health standards. 
  • Pass state laws. Apart from EPA action, states should pass independent laws and facilitate consolidations like West Virginia, North Carolina, Kansas, Louisiana and California have done. State laws should include stronger data collection requirements on utility shared service arrangement including staffing, outsourcing management, water purchase arrangement, and similar structures. 
  • Increase understanding of consolidation benefits. Better information is needed regarding outcomes after consolidation including water prices, water quality, and public trust. This data can help recommend approaches to consolidation and shared services that are more likely to produce health equity, fair rates, and better water quality. 
  • Improve data collection: The EPA needs a more comprehensive database on consolidation and shared services. Doing so depends on the EPA, states, and utility leaders developing standardized terminology to describe truly independent utilities, separate systems but with shared ownership, systems using the same water but with distinct ownership, and a diversity of shared or contracted management and staffing arrangements. 

According to EPIC, too many water utilities are simply too small to consistently treat water to the standards that all Americans should expect. Currently, there is no comprehensive data on community water system consolidation and shared service arrangements, such as one utility buying treated drinking water from another or shared staff working between two or more utilities. 

The lack of federal record keeping on consolidation of water systems limits the strategic planning of water system management and evaluation of consolidation outcomes that inform policy and legislation, EPIC says. This in turn affects the safety and reliability of water system services. When systems fail to keep up with water safety standards, the public health of the community it serves is threatened and thousands of customers can be left without a safe and reliable source of drinking water. Small water systems, which often lack resources, are especially prone to such occurrences. 

EPIC adds although this EPA dataset was not designed for this purpose, it is the only federal database that captures water quality information which is easily accessible to the public and hence is a common tool that advocates, researchers, and the industry-at-large can look to.

“Unfortunately, it is an imperfect method for assessing the state of consolidations nationwide” says Norriss. Based on survey data and interviews with state agency officials, EPIC’s researchers found that states do not use SDWIS to track consolidation information. 

The report, which was produced by funding from the Robert Wood Johnson Foundation and Spring Point Partners, can be accessed here.

The Environmental Policy Innovation Center is a nonprofit organization based in Washington, D.C., whose mission is to build policies that deliver spectacular improvements in the speed and scale of conservation and environmental progress. EPIC focuses on innovative policies that improve health, access, and affordability; eliminate disparities across water systems; and build public trust in water supplies.

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