This section gives some examples of financing for resilient and equitable water resource investments from different levels of government (federal, state, and local) and from sources outside the public sector.
Decades ago, federal funding was the main source of funding for water infrastructure projects. In 1977, not long after passage of the Clean Water Act and Safe Drinking Water Act, the federal government funded 63% of water infrastructure costs. Essentially, the federal government was imposing requirements on municipalities to provide safe drinking water and treatment, but the federal government paid the majority share of the costs of meeting these requirements. Since that time, financial support for water utility infrastructure has eroded away. By 2014, the share of water supply and treatment infrastructure costs covered by the federal government has slipped to a mere 9%.See footnote 1 This essentially leaves municipal ratepayers disproportionately carrying the burden of infrastructure investment. Frontline communities struggle the most with funding water systems. As a result, many utility water systems are too underfunded to supply drinking water or to provide suitable wastewater treatment at a time when many treatment systems are deteriorating.
The federal clean water and drinking water revolving funds are administered by states. These were the primary sources of funds for infrastructure until the passage of WIFIA.See footnote 9 For example, the California Infrastructure and Economic Development Bank’s Infrastructure State Revolving Fund Program can be used by municipalities to fund such projects as drainage, water supply, and flood control, environmental mitigation measures, sewage collection and treatment, and water treatment and distribution.See footnote 10 California SB 200 provides “nearly $1.5 billion in combined funding to address the lack of safe drinking water in some communities across the state.”See footnote 11 The act puts priority on funding disadvantaged communities in the state. In New York, the Clean Water Infrastructure Act makes available $3 billion in investments to clean and drinking water infrastructure projects across the state.See footnote 12 Funds from Pennsylvania’s PENNVEST program, which funds sewer, stormwater, and drinking water projects by municipalities, were used to help fund the green infrastructure project in Chester.See footnote 13
As noted in the introduction to this section, the burden of funding infrastructure projects falls mainly on municipalities. They must work diligently to obtain funding from other sources such as the federal and state governments, as well as the private sector. For example, the Charlotte-Mecklenburg buyout program was initiated with the help of FEMA funding but is now mainly funded through municipal revenue sources. Sacramento’s Leak Free program is funded from the city’s coffers, although it was initiated with a grant from the State of California.
Public-private partnerships (PPPs), a joint effort between the public and private sectors, are increasingly the preferred approach to funding municipal infrastructure. The investments must yield a satisfactory rate of return to private investors. The U.S. Environmental Protection Agency’s Water Finance Center discusses public-private partnerships to obtain private investment in public infrastructure.See footnote 14 One example is Washington DC’s DC Water Environmental Impact Bond, which attracted private investors to help pay for green infrastructure as part of Washington's Water’s Clean Infrastructure Project (see Green Infrastructure section). Private investors limit the financial risk to DC Water if the green infrastructure performs below expectations, but can reap financial rewards if the program exceeds expectations.See footnote 15 The private firm Corvias helped manage the public-private partnership that helped fund green infrastructure investments in Chester, Pennsylvania.
In general, funding from nonprofit organizations such as philanthropies does not appear to be aimed at funding municipal water infrastructure, but it can be used for supporting services and building community outreach. For example, following the lead in the water crisis in Flint Michigan, ten foundations pledged a combined $125 million to help Flint recover.See footnote 16 The money would support such activities as having technical experts review the plans for addressing the water quality problems and promoting civil engagement and local decisionmaking to help ensure that frontline communities are part of the decisionmaking process that addresses the water problems.See footnote 17
Endnotes:
1. Water Infrastructure in the Great Lakes: Turning the “Rust Belt” into the “Water Belt,” Clean Water Action, View Source (last visited July 23, 2020). | Back to contentBack to content
2. The U.S. Environmental Protection Agency’s website has a nice overview of HUD programs. Housing and Urban Development Community Grants Available to Water and Wastewater Utilities, EPA, View Source (last visited July 23, 2020). | Back to contentBack to content
3. Clean Water State Revolving Fund (CWSRF), EPA, View Source (last visited July 23, 2020). | Back to contentBack to content
4. Drinking Water State Revolving Fund (DWSRF), EPA, View Source (last visited July 23, 2020). | Back to contentBack to content
5. Rich Glaze & Scott McDonald, Source of Funding for Water Infrastructure, American Infrastructure, View Source (last visited July 24, 2020). | Back to contentBack to content
6. For information on federal sources of funding for disaster assistance, see, Overview of Federal Disaster Funding Opportunities for Water and Wastewater Utilities, EPA, View Source. | Back to contentBack to content
7. Weldon Freeman & Jay Fletcher, USDA Invests in Rural Water and Wastewater Infrastructure in 29 States, USDA (June 26, 2019). Back to contentBack to content
8. Effective Funding Frameworks for Water Infrastructure, EPA, View Source (last visited July 24, 2020). | Back to contentBack to content
9. Glaze & McDonald, supra note 5 (pretty sure this will be the right supra footnote). Back to contentBack to content
10. Funding Opportunities/Grants and Loans, California Water Boards (June 6, 2019), View Source. | Back to contentBack to content
11. Governor Newsome Signs SB 200, Advancing Safe Drinking Water Solutions (July 26, 2019), View Source. | Back to contentBack to content
12. Water Infrastructure Improvement Act, New York State, View Source (last visited July 24, 2020). | Back to contentBack to content
13. Mission, Pennvest, View Source (last visited July 24, 2020). | Back to contentBack to content
14. Leading Edge Financing for Water Infrastructure, EPA, View Source (last visited July 24, 2020). | Back to contentBack to content
15. DC Water’s Environmental Impact Bond: A First of its Kind, U.S. EPA Water Infrastructure and resiliency Finance Center (April 2017), View Source. | Back to contentBack to content
16. Kathryn Thomas, Ten Philanthropies Will Help Flint Recover and Rise from Water Crisis, Charles Stewart Mott Foundation (May 11, 2016), View Source. | Back to contentBack to content
17. Id. Back to contentBack to content
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