U.S. News and World Report
By Marianne Lavelle
The nation's hidden water problem rushed into the basement apartments of 51st Streetin West New York, N.J., last February 9, shortly after 4 a.m. That's when a 2-foot-widepipe ruptured under Bergenline Avenue, New Jersey's longest commercialthoroughfare. Water burst through the asphalt with the force of a geyser, then cascadeddownhill. "It came down the street like rapids," says Anthony Avillo, the deputy fire chiefon the scene. Families were awakened by water cresting over the sides of their beds orby neighbors screaming.In the 18-degree cold, North Hudson Regional Fire and Rescue crew members loweredthemselves chest-deep into the drink and deployed life rafts to help people escape. "Wehad one woman holding a baby and offering it up from the water like Moses," Avillorecalls.Miraculously, no one was seriously hurt in the deluge, but 31 people, including 14children, were forced from their homes—some for almost a month. And as is often thecase with a major water-main break, the impact rippled far beyond the uprootedfamilies. Water service abruptly stopped for 200,000 people in five of the nation's mostdensely populated towns, directly across the Hudson River from Manhattan.Even when taps began to flow again, residents were warned to boil water because amain break can be a gateway for harmful bacteria. "It was really a nightmare, and it wasdangerous," says Christopher Irizarry, chief executive of the North Hudson CommunityAction Corp., which assisted the stranded residents. The worst fear was that a firewould break out, because hydrants were dry. Water tankers were called in from milesaway to stand by.For the North Jersey communities, the crisis was over in 60 hours, when the break wasrepaired and the water deemed safe. But those who've examined the state of wateraround the nation and the globe say the crisis is only beginning. Mismanagement andclimate change are shrinking clean water supplies worldwide.The brunt of the problem is borne by the poor on every continent; those who have theresources, like denizens of that flashy desert capital of conspicuous wealth, Las Vegas,grab all the water they can find. In less arid regions, Americans take tap water forgranted, but that's only because of hundreds of thousands of miles of underground pipelaid generations ago, much of it now decaying.Studies by government and utilities agree that cities and towns will need to spend $250billion to $500 billion more over the next 20 years to maintain the drinking water andwaste-water systems we equate with modern living. The only debate is how to pay for it,in a country accustomed to paying about $2.50 per 1,000 gallons—the lowest price fortap water in the developed world."There's a very widespread perception that water is a free good," says Steve Maxwell, aBoulder, Colo., consultant specializing in water and environmental issues. "It falls out ofthe sky—why should we pay for it? What's lost is the fact that we have to treat it, move itaround, store it, and distribute it to homes in a process that costs a heck of a lot ofmoney."Omen. Maxwell is among those who believe it will take a catastrophic infrastructurefailure causing widespread illness or death to spur action. Fortunately, that did not occurin West New York, but the break was a warning sign. The pipes most vulnerable to frigidtemperatures are those that are deteriorating because they are nearing the end of theiruseful lives. Rich Henning, spokesman for system operator United Water New Jersey,says some pipes in that area are 70 to 80 years old, and although many are in goodworking order, "this happened to be one where it was its time to go."The American Water Works Association, the trade group for the nation's drinking waterutilities, estimates that there are 250,000 to 300,000 main breaks per year, and thenumbers are increasing as the infrastructure ages. United Water—one of a handful ofprivate companies running U.S. water systems—is a good example; although it is now asubsidiary of the French utility company Suez, serving 7 million people in 20 states, itstill operates some of the same network that it laid when the company was founded inNorth Jersey in 1869.A major problem, at least in the view of the Bush administration, is that utilities haven'tbeen charging their citizens the true cost of providing water but instead subsidize theservice with other revenues. The Environmental Protection Agency promotes the idea ofwhat it calls "full—cost pricing" as one of its "four pillars" of sustainable water systems,along with conservation, better management, and cooperation among communities inthe same watershed.Says Benjamin Grumbles, EPA assistant administrator for water, "The more peopleunderstand the true value of water as the lifeblood of the community, and the value ofinfrastructure as the organs and bones that help support the system, the more they'llrealize prices need to reflect that."Pillow talk. Ken Kirk, executive director of the National Association of Clean WaterAgencies, representing sewer systems, wryly refers to the administration's idea as "thefour pillows," because "they're kind of soft," he says. Although all make sense, he says,they wouldn't close the funding gap. In fact, in the topsy-turvy world of water, efficiencyworsens the fiscal picture. The more water consumers save, the less revenue forutilities, which charge by the gallon.Kirk's group is one of several pushing the concept of a federal trust fund for water, muchlike the one that finances the highway system through the federal gas tax. Advocateshave put forth funding ideas like a surcharge on bottled water, fees on toilet paper andother "flushables," or some other broad revenue source, but it all sounds like a tax tothose on Capitol Hill and is a hard sell. Federal funding for drinking water and wastewatertreatment, in fact, has declined 24 percent since 2001.Since federal largess cannot be counted on, the problem is squarely in the lap of localwater systems. Some have had success. Atlanta, over the past five years, tackled awater system in crisis with a $3.9 billion improvement program. The city doubled waterrates, and voters approved a 1 percent sales tax to help turn around a system in whichraw sewage spilled into waterways, and dangerous street sinkholes and advisories toboil water were a regular occurrence due to water-main breaks.Aqua America, the largest U.S.-based private water company, has obtained approval insome states for regular limited rate increases to address infrastructure. Chief ExecutiveNicholas DeBenedictis says his company is at full-cost pricing, and consumers haveseen rate hikes of no more than 2.5 percent every two years. That has enabled AquaAmerica to ramp up its pipe-replacement program, which was so behind in the early1990s that it would have taken 900 years to deal with aging infrastructure.Now, the company, which serves 2.8 million customers in 13 states, boasts it is able toreplace 1 percent of its pipes annually. It's still a daunting job, however, since fullreplacement would take 100 years. And Aqua America continues to suffer its share ofmain breaks; in fact, the cost of the ruptures held the company's profit increase below 2percent in the last quarter even as revenues soared 16 percent.Risk averse. The economics have discouraged some would-be water saviors. Germanutility giant RWE wants to spin off its American water business just four years afterentering the market here with great fanfare. Minutes of RWE corporate board meetingsshow that its executives concluded they had underestimated the business risk posed bydecaying infrastructure and neglect.Still, plenty of potential investors look at the same landscape—especially the prospectof monopoly ownership—and see an opportunity. Private-equity funds have moved ontothe scene, scooping up two relatively small U.S. water systems last year at highpremiums. But Jack Hoffbuhr, executive director of the American Water WorksAssociation, isn't ready to identify it as a trend. "Water utilities are three to four timesmore capital intensive than any other utility," he says. "Once private-equity firms look atwhen they'd begin to see a return on their funds, they might not be quite as interested ininvestment."Meanwhile, back in New Jersey, United Water still copes with water-main breaks eventhough it says it has spent $240 million in the past decade on capital improvements,including new pipelines. Now, it is trying to recoup some of those costs.Just two weeks after the West New York main break, but unrelated to the incident,United Water announced it would ask its customers to pay 28 percent more for water,its first rate hike in a dozen years. Although that would add only $95 a year to theaverage bill, it will be a blow to the many poor residents in its service area.In other words, it may make sense to pay more for water, but it still feels unfair to thosewho must buy this essential service, whatever the price. Water consultant Maxwell saysthe challenge is being faced worldwide. "How do we treat water more and more as aneconomic commodity—just like copper or oil or aluminum—and make rational economicdecisions about it on the one hand," he says, "and on the other hand, accept that it's afundamental human right and everybody has to have it to exist?"
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