The $1 Trillion Problem That Nobody’s Talking About


Imagine a terrorist set off a bomb on a busy street a few miles from downtown Washington, D.C. The explosion was strong enough to create a crater 20 feet deep, and the aftermath led to water restrictions for 1.8 million residents of the area. All the systems put in place to head off this threat failed to sound before it went off. More explosions are threatened for the same area, and the rest of the nation, while not quite as prone to this particular group of terrorists, is facing threats from other groups planning to harm our water supply and cause over a trillion dollars worth of damage.

Such a situation would be a huge failure that would get national attention, right? Well, it happened this past March, and hardly anyone outside the local area heard a peep about it. Only instead of a terrorist bomb, it was an exploding water main.

In Maryland’s DC and southern Baltimore suburbs, the water mains have become notoriously “prone to exploding without warning,” sometimes in rather densely populated areas. The problem comes down to cheap, outdated materials that make the pipes prone to exploding long before their typical expiration. Loose industry standards allowed the contracting company (since defunct) to undercut competitors on the pricing. Do you recall the expression “You get what you pay for”? Maryland is learning that lesson now.

Our nation’s infrastructure needs work. And though the easiest type of infrastructure to bring up to date, due to some spectacular cases of it failing, is our bridges, our water system is equally vulnerable.

Much of our water infrastructure was built about a century ago, and most of it now is nearing the end of its lifespan. With local governments strapped for cash, utilities have already begun seeking large increases in water-bill rates in order to invest in repairs that are long past due. In sorting through many of these stories, there are two key lessons that we can learn for the future. First, delayed repairs mean large sticker shock later. Second, when you scrimp in order to save on materials, you need to pay much more later for repairs.

Unlike Maryland, most states are dealing with less dramatic problems that come from aging infrastructure. Two other states, Connecticut and New Jersey, are only now beginning to confront the large price tag. Note that though all these examples are Northeastern states, the problem isn’t limited to just them. The national total for aging water equipment through 2035 is just over $1 trillion. The Northeast’s share of that is only $108 billion. The rest of that $1 trillion is for repairs in the rest of the country.

Let’s start with New Jersey, where the havoc wreaked in Hurricane Sandy’s wake has drawn attention to the poor condition of the state’s water system. From the hurricane alone, the state sustained $3 billion worth of damage, but that’s understandable after a disaster. The real story here was the cost of the desperately needed repairs that came from aging, the price of which was estimated at more than $40 billion for the state.

The problems listed by the utilities ranged “from reduced water flow and quality, caused partly by build up of sediment, to pipes that leak 20% — and in some cases up to 45% — of the treated water they carry,” according to NJ Spotlight.

In Connecticut, a fight has already commenced over a potential double-digit rate increase in order to repair old pipes. Aquarion Water Co., which manages pipes for 47 different Connecticut towns and cities, requested a 17.1% rate increase for the next year in order to compensate it for work that has already been done in 2010.

Though the rate will probably be negotiated down a bit in the end, it still angered people in Fairfield, CT last week who came to a hearing on the subject to complain about the rate increases, which would leave Aquarion with a 10.6% profit margin. Truth be told, though, their margin isn’t so far out of the norm, at least in comparison with other water utilities.

As we begin to spend money to repair our infrastructure, we would do well to remember these stories to make sure when the pipe goes in, it works, and to make sure that we invest the small amounts now to avoid paying a larger price later.