Use the COVID-19 crisis to fix the water crisis
America’s tap water is an essential part of the nation’s health infrastructure. Although delivery of that water is now under stress because of the coronavirus crisis, it also presents a once-in-a-generation opportunity to significantly improve our drinking water.
Especially now, every home must have access to water. The uninterrupted delivery of water facilitates the frequent handwashing required to protect against even wider COVID-19 contamination and allows a homebound nation to prepare meals and keep dwellings clean.
Yet, while the virus hasn’t been transmitted by drinking water supplies, our national water system has become a victim of the coronavirus pandemic — forcing many utilities to operate with a bare minimum of financial reserves or even in the red.
Because water fees are tied to usage and not necessarily to the actual cost of operating the system, payments from shuttered industrial and commercial customers are expected to fall by more than $7 billion. At the same time — and felt more broadly — with record numbers of Americans out of work, failure to pay water bills have already begun to rise.
Late payments affecting cash flow aside, an industry study projects delinquencies may rise nearly sevenfold as ever greater numbers of consumers default on their water bills. This is expected to cost utilities an additional $5.5 billion. While failure to pay might have previously led to a water shutoff or a financial penalty, those measures have been suspended for the foreseeable future, creating a perverse incentive encouraging non-payment by many who are able to pay.
As revenues fall, expenses have begun to rise. Water utilities can’t shut down, which means that all essential employees have to be at work. Many utilities are housing these workers in special sequestered facilities
For years before this crisis hit, a majority of America’s water utilities were already in financial distress. To balance the books, utilities deferred maintenance, resulting in a widespread failure of infrastructure. Just last year, there were nearly a quarter of a million U.S. water main breaks. Likewise, many utilities have been understaffed, with approximately a third of water utility positions unfilled. Without adequate funding or reserves, purchase of new health-related technologies goes undone.
All of this has led to cascading problems — and ever-greater exposure by Americans across the country to unsafe drinking water. With the COVID-19 crisis, this is certain to get worse.
Logically, water utilities would simply raise rates to cover any shortfalls. But logic is often trumped by the structure of U.S. utilities. Approximately 85 percent of them are owned, operated or under the influence of a local municipality. Mayors know that residents (a.k.a. voters) often see increases in water fees as a backdoor tax increase, and many of these elected officials have prioritized keeping costs low over the health of the water system or the consumers who use it.
At this time, not only would a rate increase be politically tone deaf, but there are reports of municipalities putting system improvements on hold and using the funds budgeted for these infrastructure and technology improvements for non-water municipal expenses.
In all of this bad news lies a chance that won’t likely come again to address a core problem of our nation’s water utility system. Both President Trump and Speaker of the House Nancy Pelosi (D-Calif.) have suggested using stimulus funds to help utilities tackle neglected infrastructure or to otherwise help ailing utilities. While making that important fix, if used intelligently, these desperately needed dollars could also be used to promote a consolidation of utilities. These mergers would, in turn, lead to a measurable improvement in our nation’s health while bringing in new capital beyond the stimulus funding to revitalize the utilities.
There are more than 50,000 U.S. drinking water utilities, an illogically large, inefficient and wasteful number. In addition, each year there are about 80,000 reported violations of the Safe Drinking Water Act. These two statistics overlap, with a disproportionate number of violations incurred by smaller utilities. While there are some outstanding small water utilities, many of them are serial violators who — because they can’t afford needed water treatment technology — expose their customers to an array of contaminants such as arsenic, nitrates and trihalomethanes, among many others.
In addition, many of the utilities have a base of consumers so small that they can barely provide basic services. With no funds for infrastructure, they let pipes leak and break, and with no rainy day funds, they are completely unprepared for an emergency of any kind — or for a sudden shortfall in customer payments.
Just as the 2007-2008 financial crisis led to reforms in which banks had to be stress tested in order to participate in federal programs, likewise, now, federal stimulus funding should be used to encourage consolidation, especially among very small utilities. All utilities receiving funding should be required to demonstrate how funds will be used to improve infrastructure, upgrade technology, deepen human resources and eliminate health violations. Those who cannot do so should either be denied special funding or be given incentives to consolidate.
By merging, the reformed systems will have a larger base of customers and be better able to afford the staff and tools needed to rebuild infrastructure while also acquiring the technology needed to remove harmful contaminants in drinking water. From this health and economic crisis, our nation’s utilities would have a firmer financial foundation and public health would be improved.
Seth M. Siegel is the author, most recently, of “Troubled Water: What’s Wrong with What We Drink.” You can follow him on Twitter @SethMSiegel.
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