Clean Water Advocacy - Newsroom - AMSA in the News
No. 190
Tuesday, October 1, 2002 Page A-1
ISSN 1521-9402
News
Water Pollution
Funding Gap for Infrastructure Estimated
At $534 Billion in EPA's Latest Analysis
The funding gap for drinking water and wastewater infrastructure over 20
years is projected to be as high as $534 billion, the Environmental Protection
Agency said in a report released Sept. 30.
This sum includes both the cost of capital and the operation and maintenance of
wastewater and drinking water systems, EPA said in its Clean Water and Drinking
Water Gap Analysis, which considers historic investment and compares it to
projected needs.
"While much of the gap is the product of deferred maintenance, inadequate
capital replacement, and a generally aging infrastructure, it is in part a
consequence of future trends we can anticipate today, such as continuing
population growth and development pressures," the introduction to the report
said.
The report comes as chances appear slim that legislation (S. 1961) to
reauthorize the state revolving funds and provide more money to help finance
water and wastewater infrastructure will move forward (147 DEN A-6, 7/31/02 ).
Infrastructure Forum Planned
Benjamin Grumbles, EPA deputy assistant administrator for water, told BNA the
agency plans to convene an "infrastructure forum" in the spring of 2003 to
"focus on innovative financing techniques" and other mechanisms to address the
funding shortfall.
Officials representing municipal utilities said they were pleased with the EPA
report and said it will help to bolster their contention that Congress needs to
address the funding gap.
The Water Infrastructure Network, a coalition of municipal water and drinking
water groups, estimated the funding shortfall at about $460 billion over 20
years and had urged Congress to provide $57 billion over five years in the state
revolving funds reauthorization bill.
Congress has provided $1.35 billion annually for the clean water state revolving
fund and about $800 million for the drinking water state revolving fund over the
past several years.
'Looming Crisis.'
"Simply put, we face a looming crisis as pipes and systems age and remain in
desperate need of upgrade and repair," Ken Kirk, head of the Water
Infrastructure Network and executive director of the Association of Metropolitan
Sewerage Agencies, said in a statement.
"Municipalities now shoulder 90 percent of these infrastructure costs, but, as
EPA's Gap Analysis demonstrates, they cannot continue to foot this massive
infrastructure bill alone," Kirk said. "Without a serious, long-term commitment
from the federal government, the massive need over the next twenty years will
only become greater and the nation will have passed over the opportunity to stem
a looming environmental and public health crisis."
The EPA report breaks down the numbers in various ways and provides ranges of
estimates of the funding problem. For example, the estimates of the capital
funding gap for clean water range from $73 billion to $177 billion over 20
years.
For drinking water, this same estimate would range from $154 billion to $446
billion. Both ranges do not include the cost of operation and maintenance, which
significantly adds to both ranges. For clean water, the operation and
maintenance gap ranges from $72 billion to $229 billion; for drinking water the
range is between 0 and $495 billion.
Addressing the Gap
EPA said in its gap analysis that the funding shortfall is not inevitable unless
capital spending and operation and maintenance spending and practices remain
unchanged.
According to the report, the gap dwindles significantly if municipalities
increase their spending on clean water and drinking water at a real growth rate
of 3 percent annually, the report said. This would put the gap at about $76
billion over 20 years, a figure one municipal group said is not realistic.
Adam Krantz, a spokesman for the Association of Metropolitan Sewerage Agencies,
told BNA the analysis assumes an annual 3 percent growth rate above the rate of
inflation over 20 years. The 20-year period extends from 2000 to 2019, and the
last two years have seen flat growth, Krantz said.
Officials with privately run utilities have said public utilities are partly to
blame for the funding shortfall because they are inefficient, do not have
appropriate rate structures, and do not manage their assets well.
The federal contribution to water and drinking water infrastructure has come
largely through the state revolving funds under the Clean Water Act and Safe
Drinking Water Act, which provide money to states for low-interest loans to help
communities finance their infrastructure needs.
Revolving Funds Reauthorization
The state revolving funds reauthorization bill in the Senate, which contained
about $41.2 billion over five years, probably will not go anywhere because about
10 senators have put holds on it, state and municipal officials have said.
Grumbles told House and Senate committees earlier this year that the Bush
administration did not support the state revolving funds reauthorization bill
because the funding levels were too high. He said the administration was also
"sensitive to concerns that the legislation may have included too many strings"
(39 DEN A-2, 2/27/02 and 50 DEN A-3, 3/14/02 ).
The issue of too many restrictions ultimately prompted state and municipal
groups to oppose the bill, which may been the catalyst leading to its demise,
said one state official.
A congressional aide said Sept. 26 she had some hopes for the bill and that
supporters were continuing to work to address concerns of those who put holds on
the bill.
The main concern with the bill is how the money would be allocated among the
states. Currently, the funding is allocated according to an archaic formula
written into the Clean Water Act that tends to favor eastern states with larger
urban populations.
The bill would have made a transition to a new funding formula based almost
exclusively on the needs survey released by EPA every two years. Under that
formula, though, some states, such as New York, would have lost money.
According to EPA, more than $19.7 billion has been provided by the federal
government to help states capitalize their state revolving funds. This sum is
nearly doubled with state matches, bond proceeds, and loan repayments.
Since 1988, states have made about 11,000 loans to finance local infrastructure
projects totalling about $34.3 billion. In fiscal year 2001, the state revolving
funds issued about 1,300 loans totaling $3.8 billion.
The EPA report is available at
http://www.epa.gov/owm/featinfo.htmon the World Wide Web.
By Susan Bruninga