Approved by the Energy, Environment, and Water Policy Committee on March 3, 2023
Approved by the Public Policy and Practice Committee on May 17, 2023
Adopted by the Board of Direction on July 22, 2023
The American Society of Civil Engineers (ASCE) believes that:
- Financing and cost-sharing is a necessity among federal, state, and local entities involved in the design, construction, operation, and maintenance of multijurisdictional water resources infrastructure projects.
- Political and agency leadership must be steadfast and innovative in developing long-term cost sharing and financing approaches for water resources infrastructure projects and programs, including planning for the impacts of changing climate patterns and extreme events.
- Planning for interstate or large multijurisdictional projects is an inherently federal function that should be predominantly funded by the federal government. However, state and local participation is critical as land use decisions are reserved to state and local governments. It is important to perform integrated regional and watershed planning to maintain and enhance the integrity of flood-protection systems, water supply, navigation, and the environment across multiple jurisdictional boundaries. Planning should include a mechanism to cost share and finance the necessary improvements.
- The life-cycle costs of the project should be considered, including clear upfront designation of which entity will cover lifetime maintenance costs and leverage potential cost savings due to environmentally sustainable approaches.
Financing and cost-sharing is an important part of funding water resources infrastructure projects and ensures that local beneficiaries are part of the project development decision making process. As noted by the Congressional Research Service (April 2019), since the Water Resources Development Act of WRDA 1986 (P.L. 99-662), nonfederal sponsors have been responsible for a significant portion of the financing of studies, construction, and operations and maintenance of most projects. Non-federal sponsors generally are state, tribal, county, or local agencies or governments. Obtaining matching cost sharing funds requires making financing tools available to state and local governments. Local governments often do not have the necessary tools to meet their local cost share requirements.
Cost-sharing and financing programs for water resources infrastructure projects among federal, state, and local interests are needed to provide an appropriate balance of financial investments from all parties. It should be the initial responsibility of the federal sponsoring authority, as directed by Congress, to set forth a program of study and implementation, which includes commitment by the project beneficiaries for what they consider to be their share of cost contribution. Many programs lack the ability to utilize federally backed loan programs that provide state and local governments with the flexibility to leverage their traditional financing tools and meet their cost share objectives.
Local cost-sharing partners have specific, often localized, water resources challenges to which federal support is being sought for technical and financial assistance. The federal government is best suited as a partner in these projects to represent regional, system or watershed interests and to effectively integrate local projects into a geographically larger water resources infrastructure program.
While there have been many improvements in cost sharing, loan programs, and financing of water resources programs in recent years, there needs to continue to be emphasis on developing a concise and coordinated program of cost sharing and financing for water resource projects.
Effective cost-sharing of water resources investment is a key area of interest for ASCE. As the ASCE 2021 Report Card for America’s Infrastructure points to pressing needs across the nation, a robust discussion of how to get projects financed and constructed is warranted. Careful tracking of cost-sharing policies, criteria, and resulting project delivery is needed to guide robust response to local needs while attentive to larger watershed impacts.
Congress is making additional tools available to advance infrastructure investment. Some examples include:
- The 2021 Infrastructure Investment and Jobs Act was the largest investment in infrastructure across all sectors in nearly a century.
- The Inflation Reduction Act which continues investment in all infrastructure sectors.
- The Water Infrastructure Finance and Innovation Act (WIFIA), authorized under the 2014 Water Resources Reform and Development Act (WRRDA). WIFIA complements the long-standing Clean Water and Drinking Water State Revolving Funds, providing flexible, low-interest loans and loan guarantees for a range of water project types.
WRRDA expanded the authorities for non-federal entities to perform studies and construct projects (or elements of projects) that typically would have been undertaken by federal agencies and provided that the costs of these non-federal-led activities are shared by the federal government largely as if the federal agency performed them. Thus, non-federal entities advancing water resource projects may be eligible to receive credit or reimbursement (without interest) subject to the availability of federal appropriations for their investments that exceed the required non-federal share of project costs.
ASCE Policy Statement 302
First Approved in 1985