Earlier this year, the EFC at UNC, in partnership with the Southwest Environmental Finance Center and other members of the Environmental Finance Center Network, started work on WaterCARE (Community Assistance for Resiliency and Excellence in Drinking Water and Wastewater). WaterCARE is a project funded by the EPA Water Infrastructure and Resiliency Finance Center to provide in-depth technical assistance to ten communities across the country who are facing water infrastructure challenges. While some of these challenges are significant, the communities chosen to participate in the WaterCARE project have shown strong commitment to increasing community sustainability by developing robust, innovative, and resilient strategies to meet long-term water needs. Each of the communities recognizes that clean drinking water and wastewater treatment are critical services that play an important role in protecting public health, environmental quality, and community development.
As we have gotten to know the communities better through initial meetings and conversations with key stakeholders, it has become clear that although each WaterCARE community is unique, these systems face many of the same challenges. Here are four common challenges of WaterCARE communities that we have encountered so far:
Many of the WaterCARE communities we have visited are experiencing the effects of a declining population. Some of these communities are small and rural, and as a result their citizens have been migrating towards big cities in search of employment. One community we are working with in the Appalachian region has seen a decline in population as the coal industry dies down and mining jobs become more difficult to find. Another community has seen a decrease in population in response to less employment availability in the tourism industry. A decrease in population is challenging to water systems for several reasons: it means fewer rate payers, yet the same amount of infrastructure remains to maintain. When there are fewer rate payers, systems often offset the loss in revenue through an increase in rates, which can be a financial strain to customers, especially in an area with many fixed or low income customers. With this new smaller population, there is less likelihood of new industries entering the area, and therefore the ability to subsidize the ratepayers with a commercial customer is decreased. In these communities, we are searching for solutions to minimize the impact of revenue losses caused by a declining population without placing a financial strain on remaining customers.
Aging infrastructure is another common problem we have found among these water and wastewater systems. Most water and wastewater infrastructure was put in place or updated decades ago, often with federal funds, and much of that infrastructure is now reaching or is past the end of its useful life. Capital improvements are expensive, and finding the money to fund these projects is difficult, especially in communities where raising rates can place a significant strain on customers. As we have seen in countless examples across the country, with Flint, Michigan, being the most notable, aging infrastructure poses a public health and safety risk, and leaves customers vulnerable. In one of our WaterCARE communities, the system uses water tanks to store excess water. Yet, many of these tanks have contaminants, so the water was not safe to drink. In response to discovering this problem, the community tried to disconnect one tank from the system, and a result, houses in the area flooded. The system was forced to leave the tank connected to the system and treat this water, increasing spending.
The good news is that there are many tools and strategies that communities can use to address problems with aging infrastructure, and through the WaterCARE project, we are assisting the communities in discovering and applying innovative solutions.
Trouble Accessing Funding
Because systems have aging infrastructure to maintain and replace, they often look outside sources of funding are important. State and federal agencies, as well as some private companies and nonprofits, offer funding options for water and wastewater infrastructure. However, over the years, this funding has also dwindled. In our Appalachian community, state funding for the water system used to come from a tax on coal, but now that the coal industry is no longer thriving, there is less money to be given out. In another community, the system has applied for over several grants and loans for infrastructure improvements without luck. One of our goals of the WaterCARE project is to explore and design creative funding options for the systems, which may involve traditional funding sources like grants and loans, or more creative solutions like reducing costs, restructuring rates, and other strategies that result in savings.
Affordability for Customers
Because of issues like declining population, high unemployment, and low-income residents, affordability of water and wastewater services is a concern for many of the communities participating in the WaterCARE program. For example, one rural community we are assisting faces significant affordability issues: the Median Household Income is $22,000 lower than the state average (which is already lower than the national average). Because MHI is so low, many customers struggle to pay their bills, which impacts the financial sustainability of the system. The city also has a fixed 2.5% rate increase per year because of a previously issued bond, making affordability an even more pressing issue in the coming years. While many systems see raising rates as a solution to financial problems, the fact is that board members and community members are often uncomfortable when asked to approve a rate increase, especially when low income customers will be disproportionately affected.
Through the WaterCARE project, we are helping each of the communities assess the affordability of their services, which is often more complex than just considering percent MHI and involves assessing a range of metrics to get a more comprehensive view of affordability for different groups of customers. With a more complete understanding of affordability challenges, the WaterCARE program will help communities design strategies and programs that provide fair and sustainable solutions.
The four challenges described above are certainly not unique to the WaterCARE communities, and in fact, they are common to many water and wastewater systems throughout the country. Through the WaterCARE project, we hope to provide these communities with solutions that will allow them to provide water services in fair, effective and financially sustainable ways. We are already impressed by the strong commitments each of the communities has made to address these tough challenges and by the creative solutions they have already designed.