Sep 11, 2015

Fewell's Focus: Carrots & Sticks

Utilizing incentives to alleviate aging infrastructure & workforce concerns

As a former U.S. Environmen­tal Pro­tection Agency (EPA) water official, I am often asked to talk about environmental protection and the status of our waters. I like to begin by emphasizing the enormity of our collective efforts over the past four decades to clean up our messes. The environment is cleaner today due to a robust framework of regulatory tools based largely on disincentives—a national policy of “polluter pays” and strong enforcement of standards vis-à-vis centralized permitting programs. The past 40 years have focused almost exclusively on end-of-pipe pollution, the low-hanging fruit. 

While our rivers no longer catch fire, the challenges we face today, such as dead zones in the Gulf of Mexico and Chesapeake Bay, are perhaps even more vexing due to the distributive nature of the pollution sources. Distributive pollution and decentralized environmental services, such as water and wastewater provision, pose unique challenges, as they simply are not amenable to the traditional tools of a centralized approach. To fix decentralized services that are failing requires a 21st-century mindset—applying different models and approaches, but even more importantly, leveraging better outcomes through incentives. 

Incentive-based programs are on the rise. Just look at Washington, D.C.’s new storm water retention credit program—the first of its kind—or Corvias Solutions’ recently announced public-private partnership with Prince George’s County, Md., which created the first market-based storm water utility. Incentives, backstopped by robust regulations, can spur innovation and motivate action that will drive environmental performance. This is good stuff. 

Using incentives to encourage greater risk-taking and entrepreneurship to do well by doing good must be a part of this century’s environmental playbook. Don’t get me wrong: Holding polluters accountable, along with those who do not comply with environmental laws, must remain a strong commitment. This means insisting that local communities make better decisions regarding their assets. It is here that incentives and disincentives must work hand in hand. 

Incentives to Save Infrastructure 

This leads me to my next and central point: More incentives must be applied to our failing water and wastewater systems in order to effectively deal with the aging infrastructure and crises that plague so many communities. Currently, more than 70% of Americans are served by 53,000 community water systems and 16,000 sewage treatment plants. While aging infrastructure affects communities of all sizes, I worry less about the big cities that have the technical wherewithal and access to capital needed to solve these problems. What I worry about most is small-town America, where so many systems are failing or seriously noncompliant, and are putting the public and environment at greater risk. Incidentally, we also are putting at risk the operators of these failing systems, given the significant criminal and civil penalties for wrongdoing at the operations level. 

I think of my friend Jim Thebaut, filmmaker and journalist, who is in the San Joaquin Valley in California working on his next film, “Beyond the Brink,” documenting the severe drought and humanitarian toll on the 1 million residents in the valley who are living in conditions akin to those of developing countries. Of the valley’s 568 small systems, at least 25% are violating health-based drinking water standards. I suspect the numbers are even higher. Sadly, these small communities lack the money, the tax base and the technical expertise to fix these big problems. 

These are complex issues that will require sustained and thoughtful policy responses. Part of the solution begins with consolidation. I know many larger systems, both publicly and privately owned, that would gladly “tuck in” a nearby struggling neighbor, offering needed support and assistance. But consolidation is not happening because the disincentives outweigh the incentives. Distressed systems pose enormous liabilities in terms of capital costs and enforcement risks to those who might otherwise be able and willing to lend a helping hand. Therefore, we must make it less risky for these would-be rescuers by eliminating disincentives and offering an array of incentives, including, for example, a “safe harbor” involving longer periods of time to bring systems into compliance without risk of enforcement. 

Not only is our infrastructure aging, but so is our work force, making it tougher for small communities to attract and retain qualified operators. According to a survey from the American Water Works Assn., more than 50% of operators will retire within the next five to seven years. These operators are the unsung heroes who are on the front line of environmental and public health protection. But the pool of candidates is getting smaller and smaller. I applaud Paul Bishop and his team at the Association of Boards of Certification, who are developing incentives to attract more young people into the sector by elevating their stature through certification programs and encouraging states to allow for reciprocity to enable operators to more easily relocate in response to job offers. These are smart incentives that can and should be implemented immediately.

About the author

Brent A. Fewell is former deputy assistant administrator for the EPA’s Office of Water and an environmental partner in Troutman Sanders’ Washington, D.C., office, where he provides strategic counseling and enforcement defense on an array of environmental laws, including the Clean Water and Safe Drinking Water acts. Fewell can be reached at brent.fewell[email protected].

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