In a recent report by the Bluefield Research Group, infrastructure repairs for municipal water and wastewater utilities are expected to surpass $532 billion between 2016 and 2025. Although spending has increased by $28 million over the last 10 years, capital requirements are expected to fall short. [1] This has opened the door for Public-Private Partnerships (P3s) to deliver the necessary capital required, while introducing sustainable and state-of-the-art technologies to the private sector.
Water and wastewater infrastructure repairs have been neglected for decades. It is a familiar story for states that once relied on federal assistance. Federal funding for water utilities has fallen from over $16 billion in 1976 to $4.3 billion in 2014. [1] With funding slashed, expenses have been passed onto states, municipalities and ultimately ratepayers who have seen water and sewer rates rise as much as 20% annually since 2000.
According to Reese Tisdale, President of Bluefield Research, P3s are expected to play a significant role in funding future projects. “It is for this reason, among others, that public-private partnerships will begin to take on a greater significance. They enable deployment of more advanced solutions in an industry that does not lack technology options, but rather capital.” [1]
P3s offer a practical and cost-effective measure to meet the more than $600 billion needed in water and wastewater infrastructure. P3s allow private capital to address financial constraints and expand the role of innovative technologies, with limited risk to the public sector. Through these partnerships, cost savings can be applied to other necessary projects or used to stem municipal rate increases.
As municipalities across the country begin to plan for rehabilitating the nation’s infrastructure, there exists an opportunity to embrace the technical and financial expertise of the private sector. P3s will allow for improvements the nation so desperately needs without relying on an unpredictable and finite source of federal funding.
Published 7/28/2016
[1] Bluefield Research. Surging 28%, US Municipal Water Infrastructure Forecast Reaches $532 Billion. Bluefield research, June 29, 2016. Web. http://bluefieldresearch.com/us-municipal-water-infrastructure-forecast-reaches-532-billion/