The EPA estimates $271 billion is needed for wastewater infrastructure over the next 25 years. While the federal government provides some funding through the Clean Water State Revolving Fund (CWSRF), according to the U.S. Conference of Mayors 95% of spending on water infrastructure is made at the local level.
The federal government has provided on average $1.4 billion per year over the past five years to the 50 states and the District of Columbia through the Clean Water State Revolving Fund (CWSRF) programs. They, in turn, have provided on average a total of $5.8 billion per year in financial assistance to eligible recipients, primarily as discounted loans. In 2015 the annual assistance agreement for the CWSRF was $5.6 billion and in 2016 that number increased by $2 billion to $7.6 billion. Of the major infrastructure categories the federal government funds, water services receive less than 5%. It is estimated local governments spend $20 billion a year on capital sewer expenditures and $30 billion annually on O&M.
As cities continue to experience population growth, particularly in the south and west, new housing developments are constructed, and rural households switch from septic systems to public sewers, pressure on existing centralized systems and treatment plant infrastructure will require billions of dollars in new investment to meet federal regulatory requirements. 75% would go toward treatment plant improvements, conveyance system repairs, new conveyance systems, and recycled water distribution; 18% to CSO correction; and about 7% to stormwater management.
Cities and towns across the country report that complying with federal wastewater and stormwater regulations represents some of their costliest capital infrastructure projects. Local governments rely on a mix of funding, including sewer rates, dedicated fees such as stormwater or watershed restoration fees, local taxes, and the federal government. Approximately half of total annual expenditures in the wastewater sector go to operation and maintenance (O&M) and this share will likely rise further against capital investments. Since no federal funding may be used to pay for O&M, the full burden falls on rate payers.
Funding both capital projects and O&M is difficult because the public often does not see or appreciate the modern convenience of wastewater treatment, making it difficult to convey the need for sewer rate increases. Further, the rates charged on monthly bills are generally set by local governments and can be subject to political influence. As a result, wastewater rates often do not cover the full cost of service, particularly as needs rise due to aging systems, a growing number of users, and additional water quality measures. The majority of treatment facility expenses are supported by rate payers, however rising utility bills can present affordability issues. In a 2014 survey of the nation’s 50 largest cities, average monthly sewer bills ranged from $12.72 in Memphis to $149.35 in Atlanta.
Through the Water Infrastructure Finance and Innovation Act (WIFIA) of 2014, Congress authorized a new mechanism to primarily fund large water infrastructure projects over $20 million. In December 2016, the WIFIA program received $20 million in appropriations and began releasing funding opportunities to prospective borrowers in January 2017. EPA estimates that this appropriation will result in approximately $1 billion in loans supporting approximately $2 billion in water and wastewater infrastructure investments.Back to Wastewater