Bad decisions in Flint, Mich., have exposed the dangers of aging U.S. water infrastructure, and not only in the Midwestern city. Across the United States many older cities have 40-, 50- and, in some cases, 100-year-old water systems that are in need of billions of dollars of investment for upgrades, maintenance and new development.
“It’s not a financing problem,” says Ed Crooks, managing director, Infrastructure Advisory with KPMG. “There is plenty of financing available through public and private sources. The problem is what pays for that financing — user fees. Water is so underpriced in the U.S., those user fees often cannot fund the loans and investments needed to finance these projects.”
Cable TV, phone and Internet services, on the other hand, are typically several multiples of a normal water bill but much less capital intensive than water services, Crooks points out. The lack of fee revenue and high capital needs hold back investment in water systems.