Benefits of Water Infrastructure Investment
Report shows investing in clean drinking water generates a variety of public health benefits.
Adobe Stock / Aaron Amat
A new study by public policy researchers at the College of William and Mary finds that every dollar invested in drinking water infrastructure helps prevent waterborne diseases and reduce lead contamination in drinking water supplies. The research team identified a range of possible returns beginning at more than $142 generated by each dollar invested. The new findings come as the White House, Congress, and advocacy organizations are gearing up for a once-in-a-generation debate about rebuilding America’s crumbling infrastructure.
The report, sponsored by the American Concrete Pressure Pipe Association (ACPPA), a trade group representing pipe manufacturers, analyzed the benefits of water infrastructure spending in two ways: pure economic impacts and public health benefits. The report finds that one dollar invested in water infrastructure generates as much as $2.20 in economic activity.
The research team also used a panel of specific diseases to estimate the value of preventing common waterborne illnesses – norovirus, Shigella, non-Legionella bacteria, E. coli and Legionella – and the reduction in lifetime earnings associated with lead exposure-related cognitive issues.
"The connection between water infrastructure and public health is pretty obvious,” ACPPA President Richard Mueller said. “What’s stunning about this report is the scale of the return on investment in dollar terms. Spending one dollar can get you well over a $100 in public health benefits. Given how important safe, clean drinking water is for all Americans, it’s hard to imagine there’s any investment out there that gives government a better return.”
The nation’s water infrastructure investment needs are thought to be as much as $1 trillion and an estimated 240,000 water mains break each year. With those needs in mind, the report also examined ways to pay for system upgrades and studied shortcomings of current funding and financing mechanisms. The report found that water system owners are simultaneously confronted with significant investment needs and public pressure to keep water prices low, which makes it difficult to fund improvements through rate increases. Given the lack of common auditing standards, many owners don’t have a clear picture of their investment needs. And federal resources are often under-utilized because of a lack of technical or financial capacity on the part of municipalities, willingness to plan for a loan, or the ability to meet stringent regulatory and administrative requirements (whether actual or perceived).
The researchers determined that tax exempt bonds are the most popular and cost-effective financing mechanism for municipalities. However, access to low-interest bonds depends on the economic stability of a municipality and thus may be out of reach for cities with low credit ratings.
The study also underscored the benefits of collaboration – both through public-public and public-private partnerships. “Our research found that municipalities and water structure owners are more successful when they work together,” the report said. “Creating consortia of public or private partners allows localities to build their technical capacity and increase the efficiency of their cost-models.” The report concluded that combining a rate-based funding scheme with financing at the local, state, or federal level increases the feasibility of water infrastructure projects.
“There are many important takeaways from this report,” Mueller said. “Congress needs to expand tax-exempt financing, promote collaboration, and find ways to encourage system owners to assess the condition of their infrastructure and plan for improvements. There’s also a clear need to assess the administrative and regulatory strings attached to federal money to determine if there are ways to make it easier for localities to access these critical resources.”