The Low Income Water Affordability Challenge…An Issue that Impacts All Utilities

water_money

By Adam Krantz & Nathan Gardner-Andrews


All of us in the water sector have reacted with a combination of horror, deep concern and confusion as the drinking water crisis in Flint, Mich., played out in recent months. The worst municipal water crisis in the United States in decades has become a fixture in the news and has focused the public, the media and policymakers on water issues in a way we have not seen in recent memory.

The root causes of what happened in Flint are many and varied. But beyond the clear technical, regulatory, and political failures that occurred at all levels, a major lesson and challenge emerging from Flint is one of money — how to afford the water infrastructure investment needs facing our nation. This is a challenge felt everywhere — big cities, suburbs, small and rural communities. It most acutely impacts low-income communities with a shrinking ratepayer base, but no location is immune.

Many communities, both urban and rural, face the dual challenges of a growing number of low-income residents and growing wealth disparities within their rate base. Poor communities across the nation, like Flint, have the same clean and safe water obligations as their wealthier counterparts and deserve and demand the same protections. As a nation we must grapple with the fact, however, that when a city has a significant population that is living below the poverty line (approximately 40 percent in the case of Flint) increasing rates to meet increasing infrastructure needs is a complex challenge.  It is an issue of environmental justice — and some are arguing that it is a new civil rights issue.

Krantz

Krantz

The bottom line is that cities must consider what is affordable for all of their residents — from the very wealthy to the very poor — and often are limited in the rates they can charge based on the financial impacts on the poorest 20 percent of their population. This in turn limits the ultimate investments these cities can make in their water infrastructure — creating a dynamic where utilities are constrained from raising the rates they need to get the job done. In spite of these income disparities and political barriers to rate increases, clean water agencies have had average annual rate increases of nearly double the rate of inflation each year for the past decade. This is still insufficient, however, to keep up with aging infrastructure, regulatory requirements, and the new need to focus on climate change and system resilience.

So how do we fix this? A complete solution is too complex to lay out in this brief space, but it demands a full-scale review and realignment of our national water policies. Most importantly, it demands an open and clear partnership between local, state and federal governments and the public they are charged with protecting. Municipalities currently pay for about 97 percent of the investment in water infrastructure, which amounts to approximately $100 billion per year. Local entities will always cover the lion’s share of the cost of clean water, but we need to leverage investment from all levels of government and the private sector to fully address the challenge so that rates reflect the true “value of water.”

In the current political climate, there is little appetite for another large federal grants program like the early days of the Clean Water Act. But that doesn’t mean there is no role for the federal government to play. The National Association of Clean Water Agencies (NACWA) has long advocated for a sustainable federal investment partnership for water — and it seems that in the wake of Flint and the ongoing drought in the West — Congress is finally paying attention.

Gardner-Andrews

Gardner-Andrews

Most notably, the Senate’s 2016 Water Resources Development Act (WRDA) — which passed out of committee in April with an overwhelming, bipartisan vote — would establish a federal Clean Water Trust Fund, funded through a voluntary labeling program, to support water infrastructure investments. The bill also requires EPA to conduct a first-of-its kind study of the water affordability gap facing low-income populations and to explore innovative methods to incentivize, through federal investment, higher rates at the local level that can better reflect the true Value of Water. Additionally, Rep. Marcia Fudge (D-Ohio) has introduced a bill to help fund pilot programs to test such incentive-based, low-income funding initiatives. NACWA recently hosted a Congressional Briefing to highlight this bill, which featured utility leaders like Julius Ciaccia of the Northeast Ohio Regional Sewer District, George Hawkins of DC Water, and Kishia Powell of the City of Jackson, Miss., discussing the very real affordability challenges facing their communities and the need for additional financial assistance.

This Congressional focus on low-income rate assistance programs demonstrates that there is still an important role for the federal government to play in providing financial assistance to those facing water affordability challenges in a way that incentivizes states and local governments to also put more money on the table.

NACWA is encouraged by this momentum on Capitol Hill and will be working closely with Congress to advance this dialogue. It is NACWA’s hope that federal policymakers will ultimately be able to address growing affordability concerns through lasting partnerships based on trust and a sustainable approach to water policy and investments.


Adam Krantz is the chief executive officer and Nathan Gardner-Andrews is chief advocacy officer, both of the National Association of Clean Water Agencies (NACWA) in Washington, D.C.

 

Leave a Reply

Your email address will not be published.

*