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A $1 Trillion Gap: Could Traditional and Alternative Bundling Approaches Help Revive North America’s Water System?

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A $1 Trillion Gap: Could Traditional and Alternative Bundling Approaches Help Revive North America’s Water System?

The recent public health crisis in Flint, Mich. has cast a bright spotlight on water quality issues and increased public scrutiny on how aging and deteriorating North American water infrastructure is operated and maintained. The vast network of underground pipes, which span over one million miles, were mostly installed more than 50 years ago, and are either approaching or have exceeded the end of their useful life. The need for upgraded water infrastructure can be seen in the broken pipes that flood streets in our big cities, the droughts that empty reservoirs and endanger agriculture, and the population growth in some regions that is outpacing the water system's ability to sustain it.

Fixing it all costs money, and a lot of it. The Environmental Protection Agency's (EPA) most recent surveys on drinking water and clean water (sanitary sewer water) estimate the cost at $655 billion over the next 20 years. The American Water Works Association cites an even higher $1 trillion figure. The Canadian Municipal Water Consortium indicated in their 2014 report that there is an investment need of more than C$80 billion to replace the aging water infrastructure over the next 20 years and an additional C$20 billion to upgrade the existing infrastructure to meet new federal regulations. Furthermore, the Canadian federal government announced in their Budget 2016 an investment of about C$1.8 billion over five years for water and wastewater infrastructure for First Nation communities. Water service providers cite funding as one of their top challenges to repair or replace antiquated pipes, sewers, and other water facilities service providers cite funding as one of their top challenges to repair or replace antiquated pipes, sewers, and other water facilities (see chart 1). It will certainly cost more than many of them can currently afford, given fiscally constrained municipal balance sheets and concerns about local governments' ability and willingness to raise rates.