The Revenue Ups and Downs of the Water Business

The Upside: The water business sells one of the most important, if not the most important, products on earth. It is a product that can be used for thousands of purposes and one that has limited competitive pressures compared to other products (an overseas producer probably won’t take your market share anytime soon).

The Downside: Technology is working against it – innovation and behavior change are constantly putting downward pressure on sales. While water is an essential product, the business is not immune to the impacts of economic conditions – low growth and industrial decline can have a major impact on the bottom line. Regulation and less available supply in many states have forced providers to launch campaigns to sell less of their product. Market entry for new providers, particularly profit seeking companies, can be quite difficult and is often met with public scrutiny.

The Business: In some ways, providing water can more closely resemble a public health service than a commercial business. However, it is a business, and it must have a healthy bottom line to maintain qualified staff and sound infrastructure to ensure the public health benefits of reliable drinking water. For these reasons, the EFC actively studies the bottom line of this essential business. The business woes of many California utilities have been highlighted in the press recently as communities have been asked to cut their sales significantly. How has the business fared over the last ten years of national economic ups and downs and drought induced sales pressures?

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Public Finance and Environmental Sustainability

The intersection between public finance and environmental sustainability is a complex and often challenging space. However, where there are challenges, there are also opportunities. Projects and initiatives that link together public finance and environmental sustainability can be found at any scale – at the organizational, local, regional, state, or national level – and in any environmental context; water, sewer, energy, land conservation, solid waste management, etc. Increased focus on environmental sustainability has led to dramatic transformations at all levels of private sector, institutional, and governmental operations that have important finance implications. Facilities are being built that use far less resources. Distributed renewable energy is becoming a viable alternative energy option. Private businesses, universities, local governments, and state governments are making investments that reduce the environmental impact of their operations.

New financial instruments, for example green bonds, are providing borrowers and investors with new choices. These developments often have significant financial implications related to who pays, how much they pay, and how they pay for essential services and products.

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Finding Money in the Water System Budget: Energy Savings Performance Contracting (ESPC)

The way that drinking water and wastewater systems pay for energy improvements in the United States is changing – including for small drinking water systems (serving 10,000 or fewer people). As has often been mentioned on the EFC’s blog, the days of huge federal grants for construction of water and wastewater systems are long past. Since an energy improvement is a kind of capital improvement, there are many ways to pay for such projects: cash savings (e.g. through a utility’s capital improvement fund); loans (state revolving fund loans or bank loans); issuing bonds (if you are a local government entity); internal energy revolving funds; and more. But coming up with the initial capital through one of the aforementioned means can be challenging.

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Crafting Wetland Program Plans to Increase the Likelihood of Securing Appropriated Funds and Grants

EPA is encouraging all states and tribes to create wetland program plans.  These plans lay out the activities that each state or tribal program plans to undertake over the next few years in each of the four core elements of wetland programs: regulation, monitoring & assessment, restoration & protection, and water quality.

In a previous post, we discussed how those plans can incorporate elements of sustainable finance.   The most comprehensive plans first identify the work of the state or tribal program and then describe a plan for seeking out appropriate funding (both from the state/tribe itself and from grants) and appropriate partners to complete that work.

Of course, identifying funding sources is not the same as securing those funds. How, then, can wetland program plans be written to increase the likelihood of securing state and tribal appropriated funds and grants?

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Financing Water Management in a Caribbean Setting  – A Case Study of Trinidad and Tobago

A Caribbean getaway is often on the wish list of summer plans. The warm tropical weather, accessibility to beaches, and lush rainforests beckon. But these very factors often lead to a myriad of challenges when it comes to water resource management on small islands. Increased flooding in Caribbean countries such as Trinidad and Tobago can be linked to development and behavioral practices that encourage erosion and the blocking of water channels. Continue reading

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