Why Water Rates are Likely to Increase

Growing Blue

A new study conducted by Columbia University shows that U.S. water infrastructure is trapped in a recurring cycle of debt and rate hikes, even while its condition and resilience continues to deteriorate.

The study is one of the first to systematically explore national survey data on water rates. And it reveals that both debt and rates for the nation’s water infrastructure are rising, increasing the financial burden on ratepayers.

Upmanu Lall, the director of Columbia’s Water Center, noted that transparency is the key to achieving water system sustainability. He added that we “need to rethink” the water utility of the future. This includes how users will pay for water services and stimulate sustainable use.

Some key facts:

  • From 2000-2010, average utility debt increased by 33 percent; water rates increased by 23 percent.
  • Debt and rates have increased by more than 100 percent at approximately one third of the nation’s utilities surveyed by the American Water Works Association (AWWA)
  • The American Society of Civil Engineers ranks the nation’s drinking water infrastructure with a “D” grade, requiring more than $1 trillion in investment over the coming decades.

As shown in the report, increased debt impacts rates, but it does not seem to have resulted in an overall improvement in the nation’s infrastructure. As indicated by the trends noted in the study’s findings, rates will likely go up in the short term.

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What the experts say:

 “To secure our nation’s water future, our water infrastructure must meet our current realities and challenges.” – Upmanu Lall, director of Columbia University’s Water Center

“The problem of escalating debt and rising rates is not a problem limited to a handful of poorly managed utilities, but includes many well-run utilities. Many of today’s water managers are operating in an old framework that needs to be re-examined for the 21st century.” – Ed Pinero, Veolia Environnement’s North American head of sustainability