Water affordability and the DWSRF

Abstract

The DWSRF provides a potentially important means of mitigating the affordability problem. The Drinking Water State Revolving Fund (DWSRF) was established under the 1996 Safe Drinking Water Act (SDWA) to provide financial assistance to water systems that cannot afford to make improvements that would allow them to comply with regulatory standards. Disadvantaged communities are also targeted for aid under the DWSRF. But to implement the provisions of the SDWA, states must adopt affordability criteria for use in their DWSRF programs. “Affordability” is the term used to describe the ability of a water system and its customers to support the cost of compliance. Although a considerable amount of research has been conducted on affordability, no simple solution has emerged. This article describes a framework for understanding the multidimensional issue of affordability.

Solutions to the problem of drinking water service affordability: A review of the evidence

“…Consistent with previous studies, we distinguish between system financial capability, community economic capacity, and residential or household affordability (Davis & Teodoro, 2014). 2 System financial capability is generally defined as the capacity of a water system to collect sufficient revenue to cover its capital and operations and maintenance costs, while affordability refers to individual end-users' or customers' ability to pay for drinking water service (Beecher & Shanaghan, 1998). In the United States, states maintain dedicated programs for the enhancement of system financial capability and community economic capability (e.g., Drinking Water State Revolving Funds).…”

A Multi-Regional Input-Output (MRIO) Analytical Framework for Assessing the Regional Economic Impacts of Rising Water Prices

“…Due to a lack of federal funding, roughly 95 percent of these costs must be funded at the local level, with the bulk of the costs falling to ratepayers in the form of rates and charges (U.S. Conference of Mayors, 2015). Rate increases are unpopular with consumers, so many utilities have deferred investments in infrastructure to maintain low rates to combat negative consumer sentiment (Beecher and Shanaghan, 1998). This continued deferral of investments, however, can increase the amount of investments needed to maintain and upgrade infrastructure (Baird, 2010).…”

“…To estimate the relationship between projected water price increases in each scenario and the corresponding reductions in household spending in other budget categories, information about potential offsetting reductions in household spending was also obtained from the same time series of Phoenix expenditure data. Declines in consumer spending are anticipated based on prior studies of water affordability (Beecher and Shanaghan, 1998). Previous research also suggests that water expenditure increases likely lead to decreased spending in other areas, given the fact that elasticity of demand for water is relatively inelastic (Yoo et al, 2014), and the assumption that households will not incur debt to pay for rising water prices, given the record levels of household debt (Kim, 2018).…”

Environmental Justice and Drinking Water Regulations

“…Although water systems may act on their own initiative to address unregulated drinking water contaminants, in some situations, issuance of drinking water regulations is a necessary prerequisite to action. Drinking water affordability has been discussed in detail elsewhere 14 , 17 , 18 . The relevant point is that as drinking water rates increase for whatever reason, consumer choices will be made that could negate assumed benefits, especially in low‐income groups characteristic of EJ communities.…”