PMI urges investment to rebuild country’s aging water infrastructure

In its mission to provide safe, sustainable drinking water and promote the efficient use of water, Plumbing Manufacturers International (PMI) recently held a press conference to advocate for restoring the country’s aging water infrastructure. This conference took place at its headquarters in Rolling Meadows, Illinois.

“We are losing trillions of gallons of water through aging infrastructure,” said Barbara Higgens, the trade group’s CEO and executive director during an event on Aug. 10 that featured experts from organizations that will be partnering with PMI in its infrastructure advocacy effort.

At a time when many of the nation’s water systems, as well as transport links, electricity grids and other essential bits of hardware are crumbling, the need for repairs and upgrades should be obvious to all. In its most recent report card on America’s infrastructure, the American Society of Civil Engineers said the country needed $3.6 trillion in public investment by 2020. Current spending plans fall well short of that.

“The phrase, ‘show me the money,’ is more than just a sports expression,” said Mary Ann Dickinson, president and CEO of the Alliance for Water Efficiency, a nonprofit organization dedicated to promoting the efficient and sustainable use of water in the United States and Canada. “We simply have not invested in our water infrastructure as we should have for the past several decades.”

Dickinson shared numbers from the American Water Works Association that put the investment dollars needed for water infrastructure at $1 trillion over the next 25 years. Through 2025, the costs increase to $1.7 trillion or $30 billion annually. And Dickenson added that much of the price tag will go to expand current water systems to serve the country’s increasing population. 

The ASCE also gave the U.S. drinking water and wastewater systems barely passing grades of a D in its most recent report card on the country’s infrastructure in 2013. (The report cards come out every four years, so expect the next one next year.)

We get a ‘D’

The engineers’ group, which gave the overall U.S. infrastructure a grade of D+, also warned that failing to make necessary investments would hit the economy to the tune of 5.8 million lost jobs and $14.2 trillion in lost productivity.

One of the day’s speakers, Darren T. Olson, senior water resources project manager, Christopher B. Burke Engineering Ltd., represented the ASCE and pinpointed the problems with the country’s water infrastructure.

“Much of components of the system are at the end of their useful lives,” Olson said, mentioning that it isn’t uncommon to dig up pipeline that is made of wood.

The ASCE also states that only 30 percent of America’s water and wastewater infrastructure needs between 2016 and 2015 are funded, leaving an investment gap of $105 billion.

“When we delay making the investment we need to make in fixing the problems, the price tag doesn’t go down, it only goes up,” he added. “Likewise, when we don’t address the problem today, we aren’t maintaining the status quo, we’re actually going backwards.”

The day’s speakers also included these sobering points regarding just how bad the problem is:

•    Among the country’s most significant challenges are 850 water main breaks a day.

•    As a result of the breaks, more than 1.7 trillion gallons of treated water is lost annually, with 16 percent of treated water never even reaching the tap.

WaterSense program

About the only good news we heard was that the industry did have one time-tested and highly effective program on hand to combat some of the impact of aging infrastructure.

PMI and its members have been a part of the EPA’s WaterSense program since its launch in 2006. The program certifies and promotes the use of water-efficient plumbing products. According to the EPA, WaterSense-labeled products are 20 percent or more water-efficient. The label is now found on more than 1,600 makes of showerheads, 1,900 models of tank-type toilets and 6,800 faucet types or accessories.

On its web page of the program, the EPA says that if one in every 10 homes in the United States was to install a WaterSense-labeled faucet in its bathroom, it could save 6 billion gallons of water and more than $500 million in energy costs to supply, heat and treat that water.

And if all the inefficient toilets in the country were converted to WaterSense-labeled models, it would save more than 640 billion gallons of water annually — that’s as much water that flows over Niagara Falls in 15 days.

Need for promotion

Still, from the looks of PMI’s own research, the WaterSense program has a long way to go. 

A 2015 WaterSense Market Penetration Study commissioned by PMI and conducted by GMP Research reported an average of only 7 percent of toilets installed nationwide as meeting WaterSense standards, with faucets at 25.4 percent and showerheads at 28.7 percent. Marks were even low in drought-stricken California. Replacing older, water-intensive products with newer models could save the U.S. up to an estimated 3 billion of gallons of water a day, according to the study.

In related research, a PMI Google survey queried 1,000 Americans of all ages about WaterSense and water-efficiency issues:

This survey showed low awareness of the WaterSense program, with 75 percent of the respondents indicating being very unfamiliar or unfamiliar with the program.

While 48 percent of respondents felt saving water was important, most survey participants were unfamiliar with WaterSense rebate and incentive programs and didn’t feel an urgent need to replace older plumbing products with more efficient one.

The political scene

At the PMI event, the trade group also shared the results of a national poll the Value of Water Coalition conducted in February that found 95 percent of Americans want public officials to invest in water infrastructure and 60 percent are in favor of paying larger water bills to support the investment.
Also, according to another PMI Google survey of 1,000 U.S. residents of all ages conducted in July, U.S. citizens are concerned about the aging underground water infrastructure and its potential adverse impact on public health:

Sixty-four percent of survey respondents identified drinking water safety as a concerning consequence of an aging underground water infrastructure, and 32 percent identified public officials failing to address water-related issues as a concern.

As we continue to move toward this year’s presidential election, another recent survey outside our industry also found strong support for infrastructure investment regardless of political affiliation.

A survey of 2,000 registered voters found that 46 percent think the state of U.S. infrastructure has gotten worse and nearly 90 percent believe that roads, bridges and energy grids require extreme repairs, according to the Association of Equipment Manufacturers.

Almost half of voters think the federal government is primarily responsible for footing the bill, and 70 percent say that more federal funding for the issue would help stimulate the economy, according to the survey.

The sentiment was shared across the political spectrum with 68 percent of Republicans, 70 percent of independents and 76 percent of Democrats say that the federal government should be making a greater effort to improve the nation’s overall infrastructure.

A majority of registered voters also feel that state and local governments should be doing more to help fix the nation’s deteriorating roads, bridges and transit systems, according to the AEM survey.

Meanwhile, about the only thing both major party presidential candidates can agree on is calling for massive funding boosts for infrastructure, arguing that greater investments in the area would create more jobs and help the economy.

Hillary Clinton has put forward a five-year plan that calls for $250 billion in direct spending on roads and bridges and another $25 billion to seed an infrastructure bank that could yield an additional $225 billion in private funding. She plans to pay for the plan via corporate tax reform, including a chance for companies to repatriate overseas profits. Her plan would essentially double the investments the U.S. is on track to make on such projects.
Donald Trump promised in a recent interview to "at least double" Clinton's numbers on infrastructure investment, in part via privatization. However, he has offered few details on financing for the plan beyond wanting to take advantage of current low interest rates. His website, which notes 28 percent of U.S. roads and 24 percent of bridges are in substandard condition, promises that the campaign will unveil a specific infrastructure plan in the "near future."

Largely a state and local matter

But if you want to understand why America isn’t spending on infrastructure, don’t only look toward D.C.

State and local governments are the chief stewards of most of the country’s public capital.

They own more than 90 percent of non-defense public infrastructure assets, and although the federal government assists in the building and maintenance of this assets, state and local governments pay 75 percent of the cost of maintaining and improving them.

The majority of infrastructure projects are selected and financed at the state and local level. In 2014, for example, state and local governments spent $320 billion on transportation and water infrastructure, compared to just $96 billion by the federal government.

But states, not surprisingly, haven’t increased spending on infrastructure in the last decade; it’s even declined slightly. Despite record low interest rates, debt issuance remains down since the recession, and most new debt is going to pay old obligations, according to Standard & Poor’s. Acquiring new debt often means higher taxes, and local governments would prefer to cut taxes rather than pay for long-term infrastructure projects.

Which is exactly what the states should be doing to lead the way, according to a report issued last February by the Center on Budget and Policy Priorities, a nonpartisan research and policy institute.

“Rather than identifying and making the infrastructure investments that provide the foundation for a strong economy, many states are cutting taxes and offering corporate subsidies in a misguided approach to boosting economic growth,” the institute concluded. “Tax cuts will spur little to no economic growth and take money away from schools, universities and other public investments essential to producing the talented workforce that businesses need. This pattern of neglect of infrastructure by states … has serious consequences for the nation’s growth and quality of life.”

According to the institute, states are cutting infrastructure spending as a share of the economy. Spending by state and local government on all types of capital dropped from its high of 3 percent of national GDP in the late 1960s to less than 2 percent in 2014.

Federal infrastructure investment, meanwhile, has fallen by half — from 1 percent to 0.5 percent of GDP — over the last 35 years, leaving more of the task to state and local governments.

In the 1990s, when the economy was particularly strong, states and localities increased their investments, according the institute. But this trend ended after the turn of the century, except for a temporary boost fueled by federal infrastructure funding to states and localities from the 2009 Recovery Act. Spending by state and local governments on all types of capital fell from 2.4 percent of GDP in the early 2000s to 1.9 percent in 2014.

Total capital spending as a share of state GDP fell in all, but five states and the District of Columbia between 2002 and 2013, with the largest drops in Nevada, Florida and Michigan.

A number of states have recognized the need for infrastructure investments. For example, the institute points out, Connecticut and Washington are in the early stages of multi-year transportation improvement initiatives. Last year, in more than 10 states, including Idaho and Georgia, even gas tax increases are earmarked to fund road construction. 

“States are in a better position to afford these investments than they’ve been in several years,” the institute sums up. “The nation’s economy has slowly recovered from the Great Recession, finally lifting state revenues above pre-recession levels, better enabling states on average to afford infrastructure investments.”

Put an emphasis, however, “on average,” since the institute also mentions that in many states, revenues aren’t sufficient to adequately cover the costs of needed services such as education and health care, and still make the necessary infrastructure investments.

“These states will need to consider tax increases to preserve public capital that is crucial to long-term economic growth while meeting other needs,” the institute says. 

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