U.S. Water Funding Enters Next Generation

The United States is entering its third generation of water and wastewaterfunding, EPA’s Michael Deane told a crowd of 200 at the Global Water Conference,held Sept. 12-13 at the Intercontinental Hotel in New York.

“In the first generation, the federal government spent billions of dollars toget over the water crisis in the 1970s and early 1980s,” said Deane, seniorpolicy advisor for infrastructure financing. “During the second generation offinancing, a loans program was started to wean communities from the subsidies ofthe first generation. Now we are entering a third generation in which full-costpricing is the expectation.”

Deane said that the key to successfully adjusting to the next generation offinancing is public awareness of the value of water. “We have beenunder-charging for water over the last 30 to 50 years, and now we are going tosee rate increases across the country,” he said. “Transparency in therate-setting process is key. We have to let the public know what they are payingfor.”

Deane was speaking as part of a panel for the conference, which was jointlysponsored Stanford Washington Research Group and Janney Montgomery Scott, twofinancial services and research firms active in the water sector.

Also speaking on the panel was Peter Cook, executive director of the NationalAssociation of Water Companies, who noted that as a country we must seek out newmodels for infrastructure financing, including public-private partnerships, theincreased use of private-activity bonds and incorporating ideas used intransportation infrastructure. Also serving on the panel, titled “Drinking WaterMarkets — Funding, Regulations, Privatization,” was Don Correll, president andCEO of American Water.

The 10th annual conference featured many of the companies setting trendswithin the water and wastewater markets. The “Infrastructure Investment —Digging Deeper” panel featured Andy Seidel, Underground Solutions; Tom Rooney,Insituform; Jeff Reynolds, Layne Christensen; Don Batrack, Tetra Tech; andGregory Hyland, Mueller Water Products.

The “Water Utilities — Leveraging the Regulated Business Model” featuredFloyd Wicks, American States Water; David Smeltzer, Aqua America; Peter Nelson,California Water Service Group; and Mark Swatek, Southwest Water Co.

Other panels included “Focus on Commercial and Consumer Markets,” “Trends inIndustrial Water Management” and “Global Water Markets — Pitfalls andOpportunities.”

In the opening panel, held the evening of Sept. 12, Debra Coy (JanneyMontgomery Scott), Francesca McCann (Stanford Washington Research Group),Michael Taylor (Blue Oak Capital Ltd.), Peter Censky (Water Quality Association)and Dave Stanton (formerly with Earth Tech) spoke on a panel titled “State ofthe Industry — Key Trends that Will Impact Stocks in the Coming Year.”

During the discussion, it was stated that mergers and acquisitions would beon the rise, and that activity in Asia — particularly China — would continue toincrease. It was reported that $125 billion was needed over the next five yearsin China alone, much of that devoted to cleanup of the Yangtze River, whichcomprises 40 percent of the country’s water supply. Without treatment, it isestimated that the river will be dead in three to five years.

The panelists also expected to continued to see an increase in the bottledwater market, as well as a move toward locally treated water. Areas in whichthey expect innovation include nanotechnology, membrane technology and mediatechnology.