Some of our readers thought that this article was worthy of inclusion. I agree! I have been a long time fan of Ted J. Rulseh. Ted is the editor of Municipal Sewer and Water Magazine and if you do not have a subscription–you should! It’s free. MSW Magazine is full of infrastructure professionals- like yourself–that are meeting the challenges of infrastructure head on … and succeeding!
I can still remember the look on my mother’s face as she walked from the car to the house after fall parent-teacher conferences when I was in fourth grade.
For some reason my siblings and I had not done so well on our first-quarter report cards that year, and mom was on the warpath. It wasn’t as if we were flunking. We’d just earned a few more Bs and Cs than mom was used to seeing. Just imagine if our report cards had contained no grade higher than a C-plus and a lot of Ds and D-minuses.
Well, that’s exactly the assessment given to our nation’s roads, bridges, airports and other facilities in the American Society of Civil Engineers’ latest Report Card for America’s Infrastructure (2009). Of significance …
to readers of Municipal Sewer & Water the drinking water and wastewater systems both earned D-minus grades.
Perhaps one reason these reports pass quietly is that for years they have shown basically the same thing. Everybody knows our infrastructure is in horrible shape and will take hundreds of billions — if not trillions — of dollars to renew. Everyone also “knows” that we “can’t afford it.” But consider these excerpts from the ASCE Report Card:
• “America’s drinking water systems face an annual shortfall of at least $11 billion to replace aging facilities…and to comply with existing and future federal water regulations. This does not account for growth in the demand for drinking water over the next 20 years. Leaking pipes lose an estimated seven billion gallons of clean drinking water a day.”
• “Aging systems discharge billions of gallons of untreated wastewater into U.S. surface waters each year. The EPA estimates that the nation must invest $390 billion over the next 20 years to update or replace existing systems and build new ones to meet increasing demand.”
It’s hard to put it more starkly than that. The federal economic stimulus program directed some billions toward water and sewer systems, but not nearly enough to make a big dent, and the program is temporary. When those dollars are spent, what then?
Not keeping pace
Evidence shows pretty clearly that for years, charges for water and sewer have not kept pace with cities’ or utilities’ real costs of operation.
Therefore, the U.S. EPA now advocates what it calls full-cost pricing for water and wastewater. A Web site (http://www.epa.gov/waterinfra structure/fullcostpricing.html) spells it out this way: “When measured as a percentage of household income, the U.S. pays less for water/wastewater bills than other developed countries. Because of this, the public has been led to believe that water is readily available and cheap.
“We need to fundamentally shift thinking in this area to meet our essential infrastructure needs. Pricing that recovers the costs of building, operating and maintaining a system is absolutely essential to achieving sustainability. Drinking water and wastewater utilities must be able to price water to reflect the full costs of treatment and delivery.”
Paying the piper
The message seems to be that we should be on a true pay-as-you-go system: Include the cost of regular upkeep and rehab in the price of the service, and keep the work up to date, so that the infrastructure is never allowed to deteriorate. Anyone care to argue with that premise?
A key objective of full-cost pricing is to encourage the responsible use of the resource. “Prices signal value to consumers and help determine whether consumers use water efficiently,” the EPA notes. “If prices are too low, consumers will use too much water … Full-cost pricing is usually interpreted to mean factoring all costs — past and future, operations, maintenance and capital costs — into prices.”
Full-cost pricing initiatives can include innovative rate structures designed to encourage conservation. Examples in the water business might include:
• Increasing block rates, which raise per-unit prices as usage increases.
• Time-of-day pricing, which charges more during peak-demand periods.
• Surcharges imposed on excessive water use.
• Seasonal rates, where prices rise and fall according to water demands and weather patterns (water would typically cost more in summer).
The net result of a full-cost pricing scheme would be to charge enough to cover all costs, while giving users some control over how much they pay through market-based signals, incentives and penalties. It seems like a sound approach.
The real cost
There’s one more thing to remember: It is just possible that investing too little in infrastructure upkeep has been costing us all along. For example, what is the cost of an effective water main maintenance and rehab program, versus the cost of massive repairs and damage to streets and private property from a major water main break?
What is the cost of sound sewer maintenance, versus the cost of treating vast amounts of clearwater I&I, and of spilling raw sewage into our lakes and rivers?
Perhaps this concept of full-cost pricing, if we adopt it wholeheartedly, is a way to get serious about fixing what ails our water and sewer infrastructure. And maybe in time that will lead to an ASCE report card that would make a mother proud.
Ted J. Rulseh