Changes in the Water World

I just returned from a wonderful conference titled Financing Sustainable Water Infrastructure at Wingspread in Racine, WI, under the auspices of The Johnson Foundation and co-sponsored by CERES and American Rivers. It was a unique gathering of experts from several cross sections of the water world, encompassing the utilities, regulators, investors, lenders and entrepreneurs.  We discussed literally everything under the water sun, and one thing was abundantly clear:  the water world is changing.  There is no more and no less water in the world than there ever was, but the pressure on water sources is clearly rising.  This has to do not only with population and consumption growth but also with environmental degradation, from deforestation to desertification.  Increasingly water is in the wrong places (or perhaps we are) and it has things in it that it shouldn’t have.

What were the main themes of the conference?  One addressed the a need for consolidation of this highly and uniquely fragmented industry, with the ultimate goal being One Water utilities, making smart decisions across their portfolios of potable, waste and storm water.  There is a counter-trend of some large industrial users who increasingly don’t need water utilities any longer as they are capable to secure their own sources and provide for treatment and distribution, but there is no reason why these two systems shouldn’t be interlinked where it makes sense.  Another theme had to do with wide-lense decision making, illustrating the need to move away from reductive, siloed thinking, and incorporating all relevant inputs into the process.  An example of this would be incorporating both upstream (e.g. watershed) and downstream (e.g. discharge) impacts of your decisions, and paying attention to interlinkages with relevant sectors such as agriculture and food production.  In other words, the 21st century “Blue Sky” utility would be treating all water, with a much broader and holistic lense in its decision making.  And it would also be much more customer-driven and in many cases far better managed. 

The role of private capital was also among the main topics.  And this is where CMI featured prominently via our groundbreaking work in Philadelphia.  The Philadelphia Water Department is perhaps the most forward-looking one in the country, having started to phase in parcel-based water charging to commercial owners under its Green City, Clean Waters initiative. It means that if you own a commercial property you will be charged on the amount of the storm water runoff you produce rather than how much water you consume.  The aim is to reduce storm water runoff and limit the number of instances when the combined sewage / storm water treatment system gets overwhelmed, resulting in untreated effluent discharge into the water ways.  Importantly, PWD allows for a near-100% credit if you can eliminate the first inch of rainfall runoff.  In that it is unique in the country (there are 400 municipalities which started to use parcel-based charging, but none allow full credit), providing an incentive for the development of a market to mitigate these charges.  CMI, in partnership with EKO Asset Management Partners has just delivered a concept paper to PWD suggesting several financing mechanisms, paving the way for private capital to be deployed.  We will share the paper with you when fit for broader consumption.  The principle is clear:  increase the permeability of your surfaces by installing green infrastructure and you can reduce runoff by 90%.  And now that Philadelphia has taken the visionary step forward we are on our way to create conditions for private capital to finance such retrofits at scale.  We will soon be speaking to other cities about taking similar steps as Philadelphia, expanding this initiative nationally. We all knew that going for a swim in the river was cool.  Now it will be clean as well.