Waukesha Looking Backward into the Future of Water
I’ve been following Waukesha’s water woes for more than a decade, and in my former capacity as executive director of Milwaukee Riverkeeper I was on the front lines of the coalition that helped to pass a strong Great Lakes Compact. However, after leaving that role in late 2008 to refocus on national water matters, I’ve been on the sidelines, observing the Waukesha water skirmishes from a distance. This week, with the deadline for public comments nearing, it’s time for me to weigh back in.
During the three packed public hearings held earlier this week there were many well-researched remarks on the legality of the request, the impact to Lake Michigan, pollution loads for the Root River which would receive the sewage effluent, and whether or not Waukesha has been aggressive enough with its required conservation strategy. These are all valid points that have been well covered. Instead, the point I’d like to argue is that there is a high risk that the proposed $207 million pipeline could become a white elephant, saddling Waukesha residents with an expensive, inflexible and quickly outdated solution. Being beholden to outdated public works is like being upside-down on one’s mortgage, but worse since there is little chance that the market value would return.
My concern is based on three intersecting lines of thought. The first is that if Waukesha leaders follow through on their proposal to build a pipeline and the required return flow, its citizens will be locked into an expensive, inflexible, super-sized option that they will need to continue to live with, and pay for, as the decades pass. If I lived in Waukesha I’d want to know what types of bonds would be used to pay for the construction, how those bonds are going to be paid off (property tax? revenue from water sales?), what assumptions are behind the revenue predictions (increased population? steady water use?) and who will be liable if there are challenges meeting those revenues. While it’s highly unusual and unlikely, it’s not unheard of for a community to be forced into bankruptcy because predicted water revenue never materialized.
The second is that, in general, water use is declining across all sectors nationally, despite a growing population. These trends hold op whether one looks at national trends, as documented in last year’s US Geological Survey’s report on water use trends from 1950-2010, or if one drills down to specific cities or suppliers. Seattle, despite being a region with ample rainfall, is a particularly well-documented example where from 1996 through 2007 water use declined 26% while population increased 16%. American Water, a private company which provides water services
in many U.S. communities, documented that it was seeing this trend throughout its service communities. For the households it served it saw a roughly 15% reduction per user over the decade leading up to 2013. Keep in mind that these communities were not necessarily trying to incentivize conservation, but it happened anyway. Even Waukesha has experienced significant declines in water use in recent years.
More importantly, these trends are projected to continue into the future. Even without local incentives, appliances are becoming more and more efficient, so that even without changing ones habits water use is predicted to decline. I recall a conversation with a plumbing manufacturer’s representative who told me “Lynn, we’re not making two different sets of fixtures. If California wants water-efficient fixtures, that’s what we’re making for everyone.” Contrast that with Waukesha’s projections that water demand will continue to increase over the next decades.
Third, technology is changing rapidly. I was saying that six years ago, but with rolling droughts throughout the southern and western United States, not to mention concerns in other parts of the world, and growing concern over climate change and resource availability, it seems that every day there is a new technology coming on line that brings down the price for removing contaminants from water, for recovering water from waste streams, and for capturing rainwater on site for future re-use.
Equally exciting is that the technologies are becoming available at smaller and smaller scales. San Francisco is now requiring that new buildings over a certain size treat and re-use waste water on-site, a move that will catalyze innovation and increase the availability of these technologies in other parts of the country. This is a critical point because the down-scaling of water technologies gives customers new options. In the past water utilities have had a monopoly on the water supply, but we are moving to a day when customers can take matters into their own hands. Actually, simple conservation and the resurgence of old practices like rain barrels for outdoor use are already ways that customers are taking business away from water utilities. But as options become more sophisticated, easier to use, and more affordable, it is likely to continue to erode at water utility’s traditional business. This is very much like what rooftop solar collectors are doing to the energy utility business. Some utilities have embraced it, but in regions that are heavily invested in large coal-burning power plants, the utilities generally feel pinched by the growth of the new technology.
So if you put all three of these things together – a large, inflexible investment, more efficient appliances and declining use, and new technologies that erode the utility monopoly – you have a perfect storm, or what some would call the utility revenue “death spiral”. That, of course, is the extreme scenario, but it illustrates the general point that Waukesha’s decision is not just about legal matters and Lake Michigan impacts. It is facing a very real business decision that, I would argue, makes no sense as one looks into the future. But don’t just take it from me. Green Biz recently published a piece on declining water use. Jeff Hughes, a nationally respected expert on water financing and director of the Environmental Finance Center at the University of North Carolina, recently wrote a piece entitled “Five Dangerous Myths for Small Water Systems”. Myth 3, “Build it and they will come” and Myth 4, “You can predict the future by looking at the past” are especially applicable to Waukesha.
This isn’t the first time I’ve weighed in on the Waukesha matter, and certainly won’t be the last. Waukesha should not put all of its eggs into a single basket. Times have changed since it first started facing its over-drawn water supply, and so have the alternatives that are available to it. Unfortunately, for the last ten years the city has been looking backward, at old projections and old technologies. If I lived in Waukesha, I’d want my city to be looking toward the future with new ideas, and realistic expectations for the uncertainties ahead.