Failing Water Infrastructure Driving Innovation in Water Financing?

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The Brookings’ Metropolitan Policy Program recently released their study findings that evaluated “the current context for local water infrastructure investment in the United States, with a particular focus on large drinking water utilities”. Not surprisingly, many if not most U.S. cities are saddled with significant debt and not able to increase their funding of failing water pipe replacement and new treatment technologies – ironically the study finds that these pressures may be driving greater innovation in water finance.  In “Investing in water: comparing utility finances and economic concerns across U.S. cities,” Brookings’ Associate Fellow Joseph Kane created a “water investment score” that allows ranking of major water utilities financial capabilities along six measures (three of utility finances— operational performance, long-term debt, and rates—and three of broader economic measures affecting system performance—changes in population, changes in median household income, and the share of lower-income households). Perhaps not surprisingly, well-heeled players such as Washington’s own DC Water held the top spots among the 97 cities evaluated, while battered (but recovering) Detroit occupies the bottom of the rankings. This study is novel and important in that it provides useful new metrics for understanding the challenges that cities face in finding ways to meet the daunting costs of their long-term water infrastructure needs.