According to the McKinsey & Company-backed 2030 Water Resources Group, the world’s water demand is expected to exceed supply by 40% within the next 20 years.1 Meanwhile, as the chart below indicates, water and sewer prices have climbed almost 30% since 2008.
The expectation is that prices will continue to rise, driven by deferred water and sewer infrastructure investments and water availability issues in many parts of the country.
WHAT’S DRIVING THE COST OF WATER?
The primary drivers for the sharply increasing cost of water include:
As of this writing, 36 states have self-reported current or expected local, regional and/or statewide water shortages. And, as referenced in the 2030 Water Resources Group report, the shortage reaches well beyond our national borders. The decline in available water is a global issue created and continually compounded by factors such as:
- Increasing populations in water stressed regions
- Climate change
- Energy product water demands (e.g. the significant amounts of water necessary for oil and gas production)
DEFERRED INVESTMENT IN INFRASTRUCTURE
The American Water Works Association estimates a cost of $1 trillion over the next 25 years to replace the nation’s pipelines alone. The recession curtailed many of these extensive and much needed improvements, which include reaching buried distribution pipelines for replacement, enhancing water treatment and storage facilities, sewer replacements, storm water management improvements, and implementing water recycling initiatives. Even as the economy rebounds, restrained capital expenditure budgets have stalled upgrades to our aging water and sewer infrastructure, the maintenance of which results in ever increasing operating costs, further straining the availability of cash for CAPEX. The cost of infrastructure upgrades is—and will continue to be—driven to ratepayers, who according to the U.S. Conference of Mayors pay up to 99% of all money spent on water supply systems.
LACK OF FEDERAL LEADERSHIP
The historic lack of federal planning and assistance for water and sewer infrastructure means the burden will continue falling to the states. Unlike major infrastructure projects dealing with energy distribution or roadways, local governments are entirely on their own when it comes to water, leaving them with a formidable challenge to allocate recession-slimmed dollars to myriad infrastructure investments. The American Society of Civil Engineers (ASCE), which has been ringing the infrastructure alarm bell for years, titled its most recent report on the water and wastewater sectors “Failure to Act.” The report, published in December 2011, estimates a nationwide $84 billion gap between what is being spent and what is needed.
For their part, companies, utilities, and municipalities can make good use of big data to ease the burden, even as the infrastructure investment scenario slowly plays out. The Ecova data warehouse helps companies develop comprehensive cost, consumption and sustainability reports and supports the outlier investigation and execution so critical to addressing water efficiency.
To learn more about Ecova’s big data initiative, and for a sampling of the detailed and actionable data we’re producing, download our new paper, A Big Data Look At Energy Trends: 2008-2012.