291
entities that may be publicly or privately owned. Often water utilities are owned by
municipalities in the USA. The municipal utilities of larger communities frequently
serve their small neighbors as well. Ownership is heavily fragmented, with many
very small to medium sized local providers in a region or metropolitan area. This
fragmentation has prevented some water utilities from developing the economies of
scale and the level of sophistication and staffing needed to address twenty-first century challenges.
Finance for potable water and wastewater systems is usually capitalized using
bonds issued by utilities, but in the USA it is common for federal and state grants to
subsidize major construction projects. Potable water and wastewater utilities tend to
sell water and treated wastewater at a price equal to their marginal unit cost, meaning that they charge roughly the unit cost of operating and maintaining their pumps,
treatment plants, and distribution networks, assuming that raw water is priced at
zero. Some utilities charge a flat connection fee as a part of their fee structure or
instead of unit pricing.
Sometimes “tier” pricing is used charging residential users a higher price for
water above a threshold representing a basic “human right” to water (see Sect.
6.2.4), so that a basic quantity of water for drinking and washing is provided at a
subsidized and low price, but extra water for outdoor and lifestyle uses costs more.
This encourages water conservation and provides a progressive pricing model. Most
utilities in the USA do not have the authority to set water prices, and water prices
are set below financially sustainable levels. Finance for potable water systems is a
major problem, especially as water infrastructures age and need more maintenance
and replacement, and as raw water rights become more expensive. In the USA, the
EPA mandates strict standards for quality and reliability of potable water systems,
although enforcement varies. Potable water systems, whether publicly owned or
privately owned, tend to be small and local and are governed at that scale.
Wastewater discharge into the natural environment is heavily regulated, in the
USA by the EPA through the Clean Water Act and the National Pollutant Discharge
Elimination System (NPDES). Maximum concentrations of pollutants and maximum temperatures are one mechanism. Another mechanism is the establishment of
Total Maximum Daily Loads (TMDLs) that establish environmental quality minimums in the receiving body of water. In the USA, regulations have successfully
reduced discharges from point sources (i.e., from pipes), and a majority of water
pollution in many areas is now from nonpoint sources like runoff from farms and
city streets. Nonpoint pollution sources have proven much more resistant to regulation and control than point sources. So-called “emerging contaminants” such as
pharmaceuticals are not covered by existing water quality regulations, but are of
concern and may be regulated in the future.
Key Points
• FEW systems are infrastructure-heavy because of the large volume and low cost
of FEW commodities.
• Infrastructure is an expensive long-term investment in marginal efficiency.
• Infrastructure creates lock-in.
10 Infrastructure
entities that may be publicly or privately owned. Often water utilities are owned by
municipalities in the USA. The municipal utilities of larger communities frequently
serve their small neighbors as well. Ownership is heavily fragmented, with many
very small to medium sized local providers in a region or metropolitan area. This
fragmentation has prevented some water utilities from developing the economies of
scale and the level of sophistication and staffing needed to address twenty-first century challenges.
Finance for potable water and wastewater systems is usually capitalized using
bonds issued by utilities, but in the USA it is common for federal and state grants to
subsidize major construction projects. Potable water and wastewater utilities tend to
sell water and treated wastewater at a price equal to their marginal unit cost, meaning that they charge roughly the unit cost of operating and maintaining their pumps,
treatment plants, and distribution networks, assuming that raw water is priced at
zero. Some utilities charge a flat connection fee as a part of their fee structure or
instead of unit pricing.
Sometimes “tier” pricing is used charging residential users a higher price for
water above a threshold representing a basic “human right” to water (see Sect.
6.2.4), so that a basic quantity of water for drinking and washing is provided at a
subsidized and low price, but extra water for outdoor and lifestyle uses costs more.
This encourages water conservation and provides a progressive pricing model. Most
utilities in the USA do not have the authority to set water prices, and water prices
are set below financially sustainable levels. Finance for potable water systems is a
major problem, especially as water infrastructures age and need more maintenance
and replacement, and as raw water rights become more expensive. In the USA, the
EPA mandates strict standards for quality and reliability of potable water systems,
although enforcement varies. Potable water systems, whether publicly owned or
privately owned, tend to be small and local and are governed at that scale.
Wastewater discharge into the natural environment is heavily regulated, in the
USA by the EPA through the Clean Water Act and the National Pollutant Discharge
Elimination System (NPDES). Maximum concentrations of pollutants and maximum temperatures are one mechanism. Another mechanism is the establishment of
Total Maximum Daily Loads (TMDLs) that establish environmental quality minimums in the receiving body of water. In the USA, regulations have successfully
reduced discharges from point sources (i.e., from pipes), and a majority of water
pollution in many areas is now from nonpoint sources like runoff from farms and
city streets. Nonpoint pollution sources have proven much more resistant to regulation and control than point sources. So-called “emerging contaminants” such as
pharmaceuticals are not covered by existing water quality regulations, but are of
concern and may be regulated in the future.
Key Points
• FEW systems are infrastructure-heavy because of the large volume and low cost
of FEW commodities.
• Infrastructure is an expensive long-term investment in marginal efficiency.
• Infrastructure creates lock-in.
10 Infrastructure