Growth in this sector has been below expectation for a number of years, but there may be some improved opportunities ahead in 2002. In early 2001, a series of reports from federal agencies and public interest groups clearly illustrating the need to address the problem of the seriously aging water/wastewater infrastructure. There is debate about the true magnitude of the problem, with estimates ranging from $300 billion to $1 trillion needed to correct the problem. However, more importantly there is agreement that the problem does exist, and that the size of the problem exceeds the resources of the federal and state governments.
Federal assistance will most likely consist of expansion and streamlining the procedures of the current State Revolving Funds for both water and wastewater. Revisions in Private Activity Bonds (specifically the removal of the current cap) may also be enacted. Underlying all these proposals is a strong desire to provide incentives for the private-sector to have an increased role in addressing the infrastructure problem.
While this issue focuses on capital investments, it will also have an impact on the operation and maintenance of municipal systems. The US Environmental Protection Agency, the principal agency for oversight of this area, is requiring accounting systems that take into consideration the full cost of capital equipment and infrastructure over the full life of the system. The combination of increasing capital needs, a limited financial support for state and federal governments, and an accounting system that fully illustrates the true cost of operation of these systems will provide significant pressure for including private-sector operation and management skills (and savings) as part of the answer.
Countering these positive pressures will be the resistance to partnerships noted above. Even with this, an increased growth of partnerships is expected for this sector.