Mar 30, 2015

Value Added

Water has long been underpriced as a resource in the U.S., which leads to overuse and underappreciation. Adding to this, gaps in infrastructure funding are dire; although estimates for maintaining and updating water infrastructure in the coming years range from the billions to the trillions, federal funding for water systems is on the decline, with the government providing only 10% of total water system funding—down from 75% in the 1970s and 1980s.

Some cities, desperate to meet regulatory standards, provide clean water and keep rates low while maintaining infrastructure, have handed the reins to private companies. Privatization, however, may not be the right answer; giving up control of important infrastructure can lead to underinvestment and insufficient maintenance, especially if there is no short-term return on the investment. 

Creating a water market—trading water rights as a commodity—is another suggestion that has been tossed around. But a water market faces challenges, too. They can be fraught politically; farmers worry that they would have to compete with municipalities, which could be bad for business, and environmentalists say that the ability to buy and sell water could negatively impact the environment.  

This does not mean that water cannot be correctly priced; we just need to find a better way of doing it, perhaps through a combination of more accurate rates and smart public policies and programs, as a recent article in The American Prospect suggested. The article gives the example of Las Vegas as featured in “The Big Thirst” by Charles Fishman as a municipality that made great strides in water management through such an approach. The former general manager of the city’s water district used a combination of pricing and regulations to greatly reduce the city’s water usage, targeting both businesses and residents, and making conservation mandatory, not voluntary. Water rates are no longer fixed, but are charged by volume used. Golf courses and new homes no longer use grass, but instead use more climate-appropriate plantings. More than 90% of water used indoors is now recycled, including that used for drinking water fountains in hotels. 

Managing water through smart governance is key to funding infrastructure, reducing water use and ensuring clean, safe water for citizens. This would, of course, require a serious overhaul of the various systems across the nation, and require collaboration of many entities and people. But if Las Vegas, a desert city driven by myriad political factions and special interests, can transform its water management system in such a positive way, then there is hope for the rest of the country.

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