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Effects on Expenses
Even with increased conservation and cost-effective development of other efficiency methods, the growing gap between capital needs to maintain drinking-water and wastewater treatment infrastructure and investments to meet those needs will likely result in unreliable water service and inadequate wastewater treatment.
Because capital spending has not been keeping pace with needs, the resulting gap will only widen through 2040. As a result, pipes will leak, the construction of the new facilities required to meet stringent environmental standards will be delayed, addressing the gap will become increasingly more expensive, and waters will be polluted.
This analysis assumes that the mounting costs to businesses and households will take the form of:
- Doing nothing and living with water shortages, and higher rates (rationing through price increases); major outlays by businesses and households, including expenditures incurred by moving to where infrastructure is still reliable; purchasing and installing equipment to conserve water or recycle water; and increasing reliance on self-supplied water and/or wastewater treatment (i.e., installing individual wells and septic waste systems when municipal facilities and services are not available options); and
- Incurring increased medical costs to address increases in water-borne illnesses due to unreliable delivery and wastewater treatment services.
These responses to failing public infrastructure will vary by location, household characteristics, and size and type of business. Expenditures due to moving, or from installing and operating new capital equipment for “self-supply,” are estimated for households, commercial establishments, and manufacturers. These costs are estimated at $35,000 per household and $500,000 to $1 million for businesses, depending on size and water requirement, and are amortized over 20 years. Although these expenditures are based on the costs associated with self-supply, the costs are used to represent outlays by some households and businesses in response to unreliable water delivery and wastewater treatment services. This study does not assume that companies or households move outside of the multistate region where they are now located. However, movement across regional boundaries and relocation of businesses outside of the U.S. is certainly a response that may be triggered by decreasing reliability of public water and sewer systems. Households and businesses that do not self-supply are assumed to absorb the higher costs that are a consequence of disruptions in water delivery and wastewater treatment due to worsening infrastructure. The assumption for this category is that these households and businesses will pay the $84 billion associated with the 2020 capital gap ($144 billion by 2040) in terms of higher rate costs over and above the baseline projected rates for water and wastewater treatment.
Water-borne illnesses will exact a price in additional household medical expenditures and labor productivity due to sick time used. The EPA and the Centers for Disease Control and Prevention have tracked the 30-year incidence of water-borne illnesses across the U.S., categorized the type of illnesses, and developed a monetary burden for those cases. That burden is distributed partially to households (29 percent), as out-of-pocket fees for doctor or emergency room visits, and other illness-related expenses leaving less for a household to spend on other purchases, and mainly to employers (71 percent), due to lost labor productivity resulting from absenteeism. The monetary burden from contamination affecting the public-provision systems over the historical interval was $255 million.
Overall Summary Of Costs
The sum of estimated expenses to households and businesses due to unreliable water delivery and wastewater treatment is shown in Table 2. By 2020, the total costs to businesses due to unreliable infrastructure will be $147 billion while that number will be $59 billion for households. The total impact of increased costs and drop in income will reduce the standard of living for families by almost $900 per year by 2020. Effects on the National Economy By 2020, the predicted deficit for sustaining water delivery and wastewater treatment infrastructure will be $84 billion. This may lead to $206 billion in increased costs for businesses and households between now and 2020. In a worst case scenario, the U.S. will lose nearly 700,000 jobs by 2020. Unless the infrastructure deficit is addressed by 2040, 1.4 million jobs will be at risk in addition to what is otherwise anticipated for that year.
The impacts of these infrastructure-related job losses will be spread throughout the economy in low-wage, middle-wage and high-wage jobs. In 2020, more than 500,000 jobs will be threatened in sectors that have been traditional employers of people without extensive formal educations or entry-level workers.4 Conversely, in generally accepted high-end sectors of the economy, 184,000 jobs will be at risk.5
The impacts on jobs are a result of costs to businesses and households managing unreliable water delivery and wastewater treatment services. As shown in Table 3, between now and 2020, the cumulative loss in business sales will be $734 billion and the cumulative loss to the nation’s economy will be $416 billion in GDP. Impacts are expected to continue to worsen. In the year 2040 alone, the impact will be $481 billion in lost business sales and $252 billion in lost GDP.6 Moreover, the situation is expected to worsen as the gap between needs and investment continues to grow over time. Average annual losses in GDP are estimated to be $42 billion from 2011 to 2020 and $185 million from 2021 to 2040.
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