Paying for Water Quality Improvements and Resilience in the Great Lakes

Published on by for Risk Solutions

Paying for Water Quality Improvements and Resilience in the Great Lakes

Tool Kit 

Focus on Green Stormwater Infrastructure

Executive Summary

Our nation’s water infrastructure is old and in a state of disrepair. A continued lack of funding and climate-related meteorological changes are further exacerbating this challenge. And in 2020, like so much else in the U.S. economy, water utilities have been affected by the COVID-19 pandemic.

Due to the pandemic, the American Water Works Association (AWWA) and the Association of Metropolitan Water Agencies (AMWA) estimate that drinking water utilities will experience an aggregated financial loss of $13.9 billion of revenue—or 16.9 percent—by 2021, plus increased operational costs (AWWA 2020).

The National Association of Clean Water Agencies (NACWA) estimates that the resulting financial impact on wastewater utilities will be around $16.8 billion, including a 20 percent drop in sewer revenues (NACWA 2020). Old and broken water infrastructure contributes to health problems, disproportionate leakage of treated water and sewage water from systems, and service disruptions.

Combined sewer and stormwater overflow systems, an outdated technology for wastewater and stormwater management, contribute significant amounts of pollution to our nation’s waterways and exacerbate existing environmental justice impacts in communities where they overflow or back up.

New approaches are needed that include innovative leveraging of traditional funding and financing options as well as exploring new emerging options to support stormwater infrastructure replacement, repair, and maintenance. This paper focuses on funding and financing options for green stormwater infrastructure, which is already an accepted means of improving climate resilience.

As much as possible the paper uses examples from the Great Lakes region, however, case studies from other regions are used where no regional examples exist. Note that findings presented herein are easily applicable elsewhere in the country.

The funding and financing options for green infrastructure highlighted in this report are not mutually exclusive. A municipality or other public utility should consider which combination of funding and financing approaches can best support its stormwater objectives at the lowest cost for its customers.

Section 2 of this paper summarizes climactic challenges in the Great Lakes region as well as the relevance and use of green stormwater infrastructure as a resilience measure.

Section 3 presents a flow chart of decision steps that could help a utility or municipality decide among funding and financing options.

Section 4 provides a summary of local funding options that include recurring, sustainable revenue sources, and intermittent funding sources.

Section 5 provides a summary of public bonds and loans. Section 6 outlines private financing and procurement strategies, including community-based public private partnerships and environmental impact bonds.

Finally, the last section of the report provides a short summary.

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