The National Association of Clean Water Agencies (NACWA) highlighted its report on water affordability as part of World Water Day 2023.
The report, “The Growing U.S. Water Affordability Challenge and the Need for Federal Low-Income Water Customer Assistance Funding,” says that rising income inequality is driving heightened water affordability challenges for low-income households, and that federal investments in water infrastructure are currently insufficient to cover the rising cost of delivering water services.
The report says that increased federal investments would remove this burden from Americans living at or beneath the poverty level.
Three NACWA public utility members, representing the Jefferson County Commission (serving Birmingham, AL), Buffalo Sewer Authority, and Northeast Ohio Regional Sewer District (serving Cleveland, OH) expressed concerns about findings from the new report, which provided details on the dwindling federal investment in clean water infrastructure each year, and the expanding cost-sharing ratio for low-income Americans in impoverished areas that are not limited to the Deep South.
Data shows average annual wastewater service charge for a single-family household has risen at twice the rate of inflation between 2000 and 2021.
Federal investment in water infrastructure has declined precipitously over the past four decades, and financial responsibility has shifted down to the local level to keep water clean and safe. Coupled with rising income inequality, this has meant that millions of Americans across the country struggle to attain basic clean water services.
“U.S. policy makers should pay attention to World Water Day because we have clean water access challenges right here in our own back yard,” said David Denard, Director of Environmental Services at the Jefferson County Commission, Alabama. “In Birmingham, we are very attuned to the circumstances underpinning the emergency next door in Mississippi. Jackson has a poverty rate more than two times the national average, but that’s not an anomaly. NACWA’s report provides strong evidence that Congress must address the wider national issue by providing targeted relief to low-income families.”
NACWA says that the report includes the following key findings:
- Federal investment in water infrastructure has decreased in recent decades, funding gaps remain.
- In sum, adjusted for inflation, the federal cost-share of water utility capital investment has fallen from 62.77% in 1977 to less than 10% in recent years.
- As public utilities, the overwhelming majority of financing for capital investment projects and operation & maintenance activities comes from individual households through bill payments.
- Passage of the Infrastructure Investment and Jobs Act (IIJA) represents a strong step in the right direction in terms of the federal government reinvesting in water infrastructure. However, massive funding gaps between what was authorized and appropriated still exist, totaling roughly $4 billion per year over the five years covered by the legislation.
- Increasing income inequality is leading to heightened affordability challenges for low-income households.
As the federal share of water utility investment has declined, income inequality has skyrocketed:
- For the top one percent of Americans, household income has more than tripled since 1979. However, for 90 percent of families, income has just increased by roughly 1 percent per year over the past 40 years.
- The average annual wastewater service charge for a single-family household ($551) has risen at twice the rate of inflation as measured by the Consumer Price Index (CPI) between 2000 and 2021. This average charge of $551 represents 2.1% of the 2021 federal poverty income threshold for a family of four ($26,500), up from just 1.3% in 2000.
- As agencies continue to respond to emerging challenges and make up for paused rate increases during the worst of the pandemic’s economic impacts in 2020 and 2021, utility rates are projected to increase by approximately 4% per year from 2022 through 2026.
The report examined pathways for Congress to address these issues through low-income water customer assistance funding.
Long-standing federal programs help American families to afford groceries and home energy bills, but there has never been a permanent program for water assistance. The Infrastructure Investment and Jobs Act (IIJA) authorized funding for a low-income assistance pilot program carried out by the Environmental Protection Agency (EPA), but no funding has been allocated.