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Water: Sustainable Infrastructure

U.S. Water Infrastructure Needs & the Funding Gap


Infrastructure Needs

As required by statute, EPA conducts surveys of drinking water and clean water infrastructure needs across the country. These needs surveys are the basis for reports to Congress and allow the country to track our known infrastructure needs through time.  For more information, follow these links:

The Water Infrastructure Funding Gap

In 2002, the U.S. EPA released the Clean Water and Drinking Water Gap Analysis. This report estimated that if investment in water and wastewater infrastructure does not increase to address anticipated needs, the funding gap over the next 20 years could grow to $122 billion for clean water capital costs and $102 billion for drinking water capital costs. There is also a funding gap for operation and maintenance, which was found to be $148 billion for clean water and $161 billion for drinking water. This points to a total gap of over $500 billion dollars.

Closing the gap is possible if utilities undertake the work that needs to be done to address aging infrastructure and if the public understands and supports the investments needed to ensure access to safe and clean water.

Gap Analysis Questions & Answers

What was the purpose of the 2002 gap analysis study?
The purpose of the gap analysis was to estimate the funding gap between projected infrastructure needs and spending for the water industry. EPA undertook the analysis to develop a solid basis for understanding the magnitude of the funding gaps potentially facing water systems.

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What did the study cover?
The analysis covers a 20-year period from 2000 to 2019 and includes estimates of the funding gap for both capital and operations and maintenance (O&M). The scope of the report was limited to a discussion of the methods for calculating the capital and O&M gaps and did not address the policy implications of the results.

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How was the study conducted?
EPA used the estimates from the 1999 Drinking Water Infrastructure Needs Survey and Assessment and the 1996 Clean Watersheds Needs Survey as the basis for its analysis. The Agency adjusted the needs survey estimates to account for the under-reporting of needs, particularly capital replacement. It then compared these needs to spending levels to calculate a gap. EPA submitted the analysis to a peer review panel consisting of experts drawn from academia, think tanks, consulting firms and industry. It then revised the projections and approaches to incorporate the comments of the peer reviewers.

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What were the findings?
The analysis estimated a 20-year capital gap for clean water of $122 billion ($6 billion per year) in 2001 dollars. For drinking water, EPA estimated a capital gap of $102 billion ($5 billion per year). The O&M gaps for clean water and drinking water were estimated at $148 billion ($7 billion per year) and $161 billion ($8 billion per year), respectively. The report also estimated the capital and O&M gaps under a "revenue growth" scenario whereby spending levels by the water industry are projected to increase at a real rate of 3 percent per year. Under the revenue growth scenario, the capital gaps for clean water and drinking water were $21 billion and $45 billion, respectively.

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How did EPA's gap estimates compare to other estimates?
Other organizations have developed estimates of water infrastructure needs and the infrastructure funding gap that are consistent with or greater than EPA's estimates. Regardless of which estimate we accept, there is broad agreement that it is important to develop a strategy to bridge the gap.

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Is the funding gap inevitable?
The funding gap is not inevitable. It will only occur if we ignore the challenges posed by an aging infrastructure network. To preserve the gains we have made since the passage of the Clean Water Act and the Safe Drinking Water Act over 30 years ago, we must address our infrastructure needs at a faster pace and examine ways to improve efficiencies in the water industry.

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What is the difference between the needs surveys and the gap analysis?
The needs surveys are conducted every four years and estimate the documented needs for drinking water and clean water infrastructure over the following 20 years. The surveys include those water infrastructure projects that the sector has concrete plans to build. They are considered conservative estimates of national needs because projects that may be needed within the next 20 years for which there is no present plan are not included. The needs surveys also only consider capital investment needs and do not cover operation and maintenance costs.

The gap analysis was a one-time study that modeled all water infrastructure expenses expected from 2000 to 2019. It modeled infrastructure needs that are not included in the needs surveys, which only include projects for which investments have been planned. The gap analysis then used historical data from the U.S. Census Bureau on expenditures at drinking water and wastewater utilities to project expenditures over the same period. The "gap" is the difference between infrastructure needs and what the sector was on track to spend. The gap analysis includes both capital needs and the funding needed to cover operations and maintenance costs.

As the needs surveys and the gap analysis use very different approaches to answer different questions, the results of the two should not be directly compared.

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