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Closing the Water Infrastructure Gap Could Save the U.S. Economy $94 Billion

Image Credit: Pacific Institute

A new study by the International Renewable Energy Agency has made a convincing case for transitioning to a low-carbon economy, demonstrating how embracing renewable energy could result in economic gains of $19 trillion and the creation of six million new jobs. Now, a report by the U.S. Water Alliance has revealed how closing the water infrastructure funding gap could give the US economy a major boost.

According to The Economic Benefits of Investing in Water Infrastructure, a part of U.S. Water Alliance’s new Value of Water campaign, capital spending on water infrastructure dropped significantly over the 1977 to 2014 period, down to nine percent from more than 60 percent 40 years ago, putting the country’s water and wastewater systems — which increasingly rely on aging infrastructure — at risk. The Water Alliance found that a one-day disruption in water service would cost the economy $43.5 billion in sales and $22.5 billion in GDP. An eight-day disruption could shrink the annual GDP by one percent.

“The report findings make it clear that investments in water infrastructure generate high-quality jobs, increase the competitiveness of American businesses and lead to a significant injection of economic activity throughout the nation,” said Radhika Fox, director of the Value of Water Campaign and CEO of the U.S. Water Alliance.

The current water infrastructure gap stands at $82 billion per year. To bring the country’s water systems to a state of good repair, the U.S. will need to invest a total of $123 billion per year in water infrastructure over the next 10 years. Addressing these infrastructure challenges could save businesses up to $94 billion in annual sales by avoiding higher costs in the form of higher water rates, costs of self-supply or costs of relocating to better-served areas, as well as spur the creation of 1.3 million jobs.

The report goes on to list the industries most dependent on water utilities. Surprisingly, academic institutions ranked first on the 15-industry list, followed by chemical manufacturing, dry cleaning and laundry services and car washes. Pharmaceutical manufactured ranked 15th.

The U.S. Water Alliance concludes that water is a fundamental element to economic health and investing in water infrastructure is investing in the future. “Meeting the investment need requires collaboration across public and private sectors, including strong partners at the local, state and federal level. The funding gap is significant, but the benefits of filling the gap are far greater.”

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