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growth

Happy Halloween

November 1, 2016
growth, infrastructure, Leadership, local government, sustainability
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Happy Halloween.  It is time for trick or treat.  Unfortunately the Sunday SunSentinel headline was a trick, not a treat.  “We’re Going to make them suffer,” was the headline – attributed to former Dania Beach Mayor and Commissioner, and now Broward Planning Council chair Anne Castro.  Oooops.  Now anyone driving in Broward County knows that the signals are not timed, which creates traffic issues during rush hours.  Everyone I talk to has the same complaint and similar stories.  I recall driving home late at night from my Dad’s condo realizing one street with a posted 45 mph sign, required people to go 52 to make the lights.  Wrong message.  Closer to my house, a main road required me to stop at every traffic light at midnight, for reasons still unclear to me.  No cross traffic.  No commercial activity.  Engineers with the County say there is too much traffic to fix it in Mondays paper despite the computers to simulate and controllers to adjust timing by cycle.  But my Dad pointed out that Detroit figured it out in the 1930s on Woodward Avenue, by hand.  I95 is being widened to add express lanes and improve traffic flow.

But the trick did not stop there.  The front page story followed with this nugget:  “Until you make it so painful that people want to come out of their cars, they’re not going to come out of their cars.”  Um, ok, but I think we have a penny sales tax referendum going on to help fund transit and transportation, but this is not helping.  Having worked for a transit company, people do not ride unless the buses come frequently enough that they don’t have to wait long.  It is a double edged sword which is why heavy investments (and losses) are required to get transit started.  Once people get used to using it, and it is convenient, they keep using it.  The bus or train ride length is less important, it is the wait that matters.  People will ride an hour if they only wait 10 minutes to get picked up.  And don’t have to walk far on either end because heat & rain matter.  I recall going to a Miami Heat game a number of years ago.  Taking TriRail and the MetroRail worked great, until I realized that there was no train back.  Not convenient.  Had to drive.  In rush hour.  Haven’t gone back.  It was so irritating I decided not to go. Not the solution business wants so I think maybe we need to rethink that statement.  Transit would help, but is needs to be convenient.  That’s what we should be selling.

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Future trends we might need to think about

April 21, 2016
agriculture, Climate, economy, ecosystem, energy, Environment, finance, Flooding, growth, Holistic Water Planning, infrastructure, innovation, Leadership, local government, management, planning, politics, pollution, population growth, power demands, power-water nexus, Responsibility, sea level rise, sustainability, utilities, water sewer management, water supplies
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Fred+Bloetscher+Senate+Committee+Holds+Hearing+cQCSwINqgm3l

Water and wastewater utilities spend a lot of time dealing with current issues =- putting out “fires.”  But there are larger trends that will affect the industry.  Here are a couple recent topics that we should consider in our industry:

Will robots be doing all our repetitive jobs?  If so what does that mean for all the people doing those jobs now.  Most do not require a lot of skills, and many of those in the jobs that will be lost, do not have the skills for other jobs?  Does the $15 per hour minimum wage accelerate this transition?  How does this affect the water industry?  Meter readers might be replaced with AMR systems.  Customer service is already migrating to direct banking.  There is a change coming.

What does the driverless car mean for us?  I am thinking about an old Arnold Schwartzenegger movie.  For utilities the issue may be how we interact with unmanned vehicles, especially when what we do can be disruptive to traffic.  What happens if those cars get into an accident?  And Warren Buffett is thinking about the impact of this on the insurance industry.  He owns a lot of GEICO stock.  It is doubtful many utility vehicles will be unmanned, in the near-term, but do our manned vehicles and the potential disruption leave us open to greater risk of loss?

Speaking of Warren Buffett says the economy is far better than certain candidates suggest.  I tend to trust Mr. Buffett.  He’s been doing this a long time and has been fabulously successful.  But he notes structural changes to the economy like those noted above, are ongoing.  That will create conflict for certain professions that migrate to automation, much as manufacturing did in the 1970s.  He raises concern about what happens to those workers and suggests that we have not planned enough for those workers who get displaced as the economy undergoes continuing transitions.  In the late 1970s we had CETA and other jobs training programs as we moved from manufacturing to other jobs.  He does not see that in place now.  The at-risk – the poor, minorities, the less educated, rural citizens…. in other words, the usual groups will be hit harder than the rest of the population.  I don’t hear that discussion on the campaign trail but utilities may want to follow these trends is the hope that we can acquire some of the skillsets that we need.  Or provide that training.

Florida’s flood protection plan received a C- from a study called States at Risk.  It said Florida lacks a long term plan for rising seas, despite being vulnerable.  On an unrelated note, the state is expecting insurance premiums to increase 25% or more for flood insurance for homeowners.  And local officials are working busily on FEMA maps to exclude as many properties as possible from flood insurance requirements.  Maybe those things are all related, just at opposite purposes, but who is going to get the calls when flooding occurs?  Storm water utilities, and sewer systems where the manholes are opened to “facilitate drainage.”  The question is what the ratings are for other states as Florida was not the least prepared nor is it the only state with exposure.

A final current trend to think about is this:  Current sea level rise projections have increase the high end, but remained steady for the 50 percentile case.  By 2200 we may see seas at 10 ft higher. That would be a major problem for south Florida.  But the world population will be over 15 billion, which exceeds the carrying capacity of agriculture (at present projections and techniques).  It also places over half the world in water limited areas.  So sea level rise is going to be huge in south Florida, but will concern be localized because of more pressing issues?   Is the number of people going to be our biggest issue in 2200?  Note both will be critical for a large portion of those 15 billion people, but the solution to either is…..?

 

Crop Circles!

April 18, 2016
agriculture, economy, engineering, Environment, growth, Leadership, management, pollution, population growth, power-water nexus, resource depletion, social vunerability, sustainability, utilities, water sewer management, water supplies, What could possibly go wrong?
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photo 2A week or so ago, on a Sunday afternoon, I flew across Middle America to Colorado for a meeting and was again struck by the crop circles that dominate the landscape west of the Mississippi River.  They are everywhere and are a clear sign of unsustainable groundwater use.  I recently participated in a fly in event for National Groundwater Association in Washington DC, where several speakers, including myself, talked about dwindling groundwater levels and the impact of agriculture, power and economies.  The impact is significant. Dr. Leonard Konikow, a recently retired USGS scientist, noted that he thinks a portion of sea level rise is caused by groundwater running off agriculture and from utilities and making its way to the ocean. He indicated that 5% of SLR each year was caused by groundwater runoff, and has upped his estimates in the past 10 years to 13%.  This is because it is far easier for water to runoff the land than seep into rocks, especially deep formations that may take many years to reach the aquifer.  And since ET can reach 4 ft below the surface, many of the western, dry, hot areas lose most of this water during the summer months.  Hence the impact to agriculture, and the accompanying local communities and their economies will be significant.

It should be noted that the US is a major exported of food to much of the world, including China, so the impact on our long-term economic trade may be significant.  Fortunately the power industry has historically preferred surface waters, but must as power demands increase, they have begun to explore groundwater in rural areas without access to surface waters.  Keep in mind that air-cooled power plants are 25% or more less efficient than water cooled systems and many of these communities lack sufficient reusable water supplied to substitute for cooling.  Hence the projection is a long term negative impact on all of us.

So the question is why isn’t the federal government talking more about this problem?  Is it fear of riling up local political officials that see growth at all costs as necessary?  It is private rights arguments that may spawn lawsuits?  Is it a lack of interest in long-term?  Or the idea that “we have always found a way”. Or is it just buried heads in the sand, leaving the next generation to deal with the problem?  A big issue, yet we do not talk enough about it.  Maybe this is not a surprise since we have not gotten very far with the discussion of limited oil, precious metals, phosphorous or other materials, and unlike them, water appears to be renewable globally.  But water is location specific.  If you have it, great.  If you lose it, a problem.  There are several recent journal articles that make the argument that much of the strife in the Middle East and Africa is water depletion related: water depletion kills local economies.  So we need to ask –what happens if we ignore the looming crisis?  Do we create more “Bundy-type” actions in the rural, dry west because they already lack water?  I suggest it is a cause for concern.

Affordability of Services

February 16, 2016
debt funding, decision-making, economy, engineering, finance, funding, growth, infrastructure, Leadership, local government, reserves, Revenues, Uncategorized
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IMG_7385One of the issues I always include in rate studies is a comparison of water rates with other basic services.  Water always comes in at the bottom.  But that works when everyone has access and uses those services.  Several years ago a study indicated that cable tv was in 87-91 % of home.  At the time I was one of the missing percentage, so I thought it was interesting.  However, post the 2008 recession, and in certain communities, this may be a misplace comparison.  A recent study by Emmanuel Saez and Gabriel Zucman notes that the top 0.1% have assets that are worth the same as the bottom 90% of the population!  Yes, you read that correctly.  Occupy Wall Street had it wrong.  It’s not the 1% it is the 0.1%.  This is what things were like in the 1920s, just before the Great Depression.  The picture improved after the implementation of tax policies (the top tax rate until 1964 was 90% – yes you read that right – 90%).  Then the tax rate was slowly reduced to deal with inflation.  The picture continued to improve until supply side economics was introduced in the early 1980s when the disparity started to rise again (see their figure below), tripling since the late 1970s (you recall the idea was give wealthy people more money and they would invest it in jobs that would increase employment opportunities and good jobs for all, or something like that).  Supply side economics did not/does not work (jobs went overseas), and easy credit borrowing and education costs have contributed to the loss of asset value for the middle class as they strove to meet job skills requirements for better jobs.  In addition wages have stagnated or fallen while the 0.1% has seen their incomes rise.  The problem has been exacerbated since 2008 as they report no recovery in the wealth of the middle class and the poor.  So going back to my first observation – what gets cut from their budget, especially the poor and those of fixed pensions?  Food?  Medicine?  Health care?  My buddy Mario (86 year old), still works because he can’t pay his bills on social security.  And he does not live extravagantly.  So do they forego cable and cell phones?  If so the comparison to these costs in rate studies does not comport any longer.  It places at risk people more at risk.  And since, rural communities have a lower income and education rate than urban areas, how much more at risk are they?  This is sure to prove more interesting in the coming years.  Hopefully with some tools we are developing, these smaller communities can be helped toward financial and asset sustainability.  But it may require some tough decisions today.

Income percent

 

Projects for 2016 – Project 1 Ethics for Engineers

January 16, 2016
engineering, Environment, ethics, growth, innovation, public relations, respect, Responsibility, Uncategorized, utilities
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IMG_8055So as 2016 starts, it is time to look at goals for the coming year.  I have several project in mind that I would like to make progress on this year. The first is interesting.  We have embarked on a project that looks at engineering ethics.  The study have several parts:

  1. Historical context
  2. Engineering societies
  3. Laws and rules by the state
  4. Perceptions
  5. Future directions

One of my reference points is an old publication from ASCE by Murray Mantell, who I got to know about 15 years ago.  He wrote such a book in 1964 when he was char of the University of Miami’s Department of Civil Engineering.  I believe he has since passed on, but I have used his book in some of my courses.

Other references come from contact with the Board of Professional Engineers in each state and various society’s code of ethics, and historical versions of same. However a “hole” in our project is the perceptions piece.  Views change with time and with technology.  Things like competition, lobbying, risk and costs create added pressures on engineers and a need to react to those pressures.  So what we would like to do is create a survey monkey survey for engineers, professional and not to respond to as a means to evaluate perceptions.

I do not have ready access to a database for this purpose.  Gathering data form many states would be difficult as well and duplicative as many engineers have multiple licenses.  However, your organization does not have this constraint.  So I am reaching out to several societies to see if there is a means to collaborate on this endeavor.  The program is as follows:

  1. Complete the questionnaire (I have a draft but if anyone has thoughts on what we should ask, I would love to hear them)
  2. Make any final changes and launch it
  3. Send notices to members.

I am hoping that some of these organizations will find benefit and will agree to participate by emailing the survey link to their members.  I will compile the data and we expect to publish it.  Most of the work so far is being done via email, and thanks to some prior students for gathering information on it.  I have a ways to go here though.  So what are your thoughts?  If anyone can help with ASCE, NSPE, ACEC, etc, I would appreciate it.  And if you get that email with a link, I would appreciate your input and comments.

Low Gas Prices = Bad Budgets

March 10, 2015
Economic Bubbles, economy, energy, finance, growth, infrastructure, innovation, Leadership, planning, power, power demands, power-water nexus
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Interesting that while we all love low gas prices and the low cost of energy is fueling an expansion of our economy, including the first gains in middle income salaries since 2008, the states reliant on oil and gas may be facing real problems financially.  A year ago I read an article that noted the reluctance of North Dakota residents and politicians to invest in roads and other infrastructure despite the influx of oil money.  Keep taxes low was the mantra.  SO they did.  A recent Governing magazine article notes that a dollar drop in oil means $7.5 million decrease in revenues for the State of New Mexico.  Since oil has lost about $30 a barrel in the past year – that is $200 million loss.  Louisiana sees a $12 million cost/dollar drop so they have $171 billion less to work with.  Alaska, perhaps the most oil dependent budget (90 percent) has a $3.4 billion shortfall, but $14.7 billion in revenues.  Texas, North Dakota, Oklahoma and Kansas are other states facing losses.  Fast growing states like North Dakota and Wyoming now have hard decisions to make.  Growth in Texas, Oklahoma, Louisiana and Arkansas may be cut by 2/3 of prior estimates as a result.  A double hit on anticipated revenues.

The comparison is interesting financial straights experienced by the “property value” states like Florida, Nevada and Arizona before and after the economic collapse in 2008.  Florida politicians couldn’t wait to cut taxes and slow spending during boom years, then got caught badly after the 2008 recession when property values dropped in half and state sales tax revenues (tourism) dropped steeply.  They ran out of reserves and refused to raise taxes (after cutting them), so cut things like education and health care to balance the budget.  Not sure how either helped low and middle class Floridians get back on track since Florida has primarily create low wage jobs since that time, not high paying jobs.  We are paying the price still.  I am guessing Nevada and Arizona are similar.

We clearly have not learned the lessons of the many mill towns in the south or the rust belt cities of the Midwest that encountered difficulties when those economies collapsed. Everyone refused to believe the good times would end.  Now Detroit is half of its former self and Akron has the same population as it did on 1910.

The moral of the story is that booms great, but short term.  Diversity in the economy is a key.  Florida will continue to be subject to economic downturns more severe than other states when it relies primarily on tourism and retirees to fuel the economy.  Detroit relied on automobiles, Akron rubber and chemicals, Cleveland steel, etc.  Some day the Silicon Valley will suffer when the next generation of technology occurs that makes the current works obsolete.  It is what happens when you are a “one economy” town.  It is also what happens when you believe the booms are “normal” and fail to financially plan by putting money aside during the boom to soften the subsequent period.

An argument could be made that if the federal government had not enacted tax cuts in 2000 when the budget was finally balanced and surpluses were presumed to loom ahead, we could have banked that money (or bought down our debts), and the amount of borrowing would have been less in 2008.  Buying down debt when times are good is good business.  So is putting money in reserve.  The question is why the politicians do not understand it.  We can run government like a business financially, but takes leadership to do it.  It takes leadership to explain why reserves are good and tax cuts are a future problem.  It takes leadership to make hard decisions like raising taxes, spending more on infrastructure, requiring people to move out of flood plains, not rebuilding in vulnerable areas, and curtaining water use policies when they damage society.  Leadership is making decisions that help the needs of the many, versus the needs of the few.  Oh wait, I see the issue now.  We need Spock to lead us…

 

Education Problem of our own Making?

December 29, 2014
economy, Education, engineering, graduation, growth, Leadership, politics, Responsibility, Student Achievement, Students, sustainability, What could possibly go wrong?
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Orange County, FL has become the second school district I know of that has decide that giving students a zero on a assignment causes the kids to lose hope of passing so they just quit.  To address this problem, the worst grade you can give them is a 50 instead of a zero.  That way they can recover from one missed assignment.  Huh?!?!  No, you read this right.  The school superintendent was quoted in the SunSentinel as saying that only 43 percent of the students who received a 50 actually recovered to pass the class with a D.  I have several questions.  First, how does this policy teach these kids any responsibility?  For the kids that do their work, how is that fair?  What message does this policy send to the kids?  Be a lazy dumbass and do nothing and you can still pass?  That reinforces the concept of entitlement which we all agree is a problem in society that we need to overcome.  Finally, if one missed assignment causes the kids to fail, why are there not more assignments so missing one is not fatal?  That is what happens with my students (who still get a zero for not doing an assignment).

It would seem that such a policy is not based on an educational goal but more like a political one to improve school perception.  That is as bad an idea as having kids beg for money for uniforms and class trips etc.  Kids do not sell anything they just beg for money.  So are we teaching them that begging and panhandling is an acceptable career?  Seriously what impression does that provide to these young minds?  How does either experience prepare kids for the real world where doing nothing gets you fired, not rewarded, and begging for money vs actually work is also not rewarded.

Once upon a time, education was the purview of the wealthy.  American businesses argued that a basic education was needed to train a workforce for industrial jobs.    The American public education system was created with this in mind- to train the next generation of workers.  With education came great social and economic advancement.  We clearly are deviating from that goal.  Students need a good foundation in math, writing and reading (in English!), civics and science so they understand social responsibility, can communicate, understand how things work the world and can solve complex problems.  They do not need pseudo-science or politicized science, but real science.  Business understands this.  But where is the business community on job training in schools?  It would seem the business community has abdicated their responsibility to local districts who are trying to meet political goals, not economic goals.  Why are we not using all the extensive testing to figure out the strengths of students and encourage them to play to those strengths? Not every kid can go to college, or should, but that does not mean they cannot achieve or be successful.  They may need different training to hone their strengths.

Back in the day my Dad told me that as the education system was developed in his hometown of Detroit, students were given aptitude tests.  I was also.  The kids were divided up based on skills and aptitude.  Students were even sent to different schools as they got older that tailored programs to their interests and skills set.  Kids that the schools system felt had the aptitude to succeed in college had different courses than students that were less academically included but perhaps more mechanical, more artisan, more labor, clerical, etc.  Different kids go training to help them succeed with their skills.  Less academic did not mean less inclined to succeed or be successful. just differently.  And they had a better chance to be successful.  We seem to miss that today.

Today we have parents insisting that everyone be treated the same, and that no kid gets left behind.  But putting kids with different aptitudes, maturity, and academic inclinations in one class is destined to either fail for all, or fail for everyone but the average.  Such a protocol begets policies like Orange (and Broward) County that direct teachers to adjust grades so “Little Johnny” doesn’t feel bad.  Extensive college prep testing and disconnected learning discourage the less academic kids, leading to dropping out, or other behaviors.  Such policies and expectations by parent and political leaders are not helpful for building an educated society.  Instead we need to search further into the root causes.  Are there too few assignments?  Are they too disconnected for students to appreciate?  Should we sort out strengths and treat different students differently to discourage disinterest?  How do we assess their strengths and design programs to help students succeed.   And who takes responsibility for these kids?  And perhaps we should revisit some of the lessons learned from the early years of the industrial development (1930s) to figure out what they did well, and see how policies today frustrate those goals.  Maybe the way forward is rooted in the past.

An Answer: If the assumption of all economists, government officials and investors is that the population must increase exponentially, what does that suggest for our future?

October 29, 2014
Banking industry, funding, growth, infrastructure, Krugman, Leadership, management, peak oil, resource depletion, Revenues, sustainability, Uncategorized, water supplies
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“If the assumption of all economists, government officials and investors is that the population must increase exponentially, what does that suggest for our future?” was a question asked a few days back.  Did you ponder this at all?  I suggest we should and here is why.  An exponential growth rate assumes a certain percent increase every year.  That means the increase in population is greater the farther out you go.  That doesn’t really make sense except perhaps at one point in Las Vegas (but not anymore).  The economy cannot really expand at a rate greater than the expansion of the population because there is no one to buy the goods or increase the demand, which is why increasing the US population is going to be viewed favorably by all politicians regardless what they say today.  House values do not increase faster than population increase unless they are in a bubble, nor does the stock market really (inflation adjusted).  Your water sales will not increase faster than your system’s population increase for any extended period of time either, so an assumption of ever increasing water sales is likely to be an overestimation sooner as opposed to later.  And then what – you have to raise rates, and keep raising rates to keep up because your demands are too low?

And what if your growth stagnates, or goes backwards as many did in 2009/2010?  That was a severe problem for most entities, causing layoffs and higher prices, pay cuts and deferral of needed improvements, mostly because no one had reserves because people thought the good times would roll on forever.  Layoffs, price hikes, pay cuts and deferral of needed improvements do help society (of course if you had lots of reserves, you weathered the recession without a problem, but too many did not).  Keep in mind the repair, replacement, and maintenance needs, along with ongoing deterioration, do not diminish with time or lack of new customers.  We have relied on new people to add money to solve old as well as new problems for many years.  What is the contingency if growth stops?

So a growth scenario makes us feel better and more confident when we borrow funds.  But if growth does not stop, where is the water to come from?  What are the resources that will be used faster?  Where does the power come from to treat the water or cool the houses?  And the cooling water to cool those power plants?  Even renewable resources are limited – most metals and oil have likely passed their peaks as far as production and water does not always fall consistently.  We have overstressed aquifers and over allocated surface waters, especially in the west.  So while growth makes us feel good financially, we need answers to the growth scenario despite the fact that we may have more funding.  Many resources are not limitless, but an exponential growth pattern ignores this.  Locally growth maybe less of an issue, but society wise?  Maybe a societal problem, or maybe we get into extreme completion with each other.  Some how that doesn’t look like a solution either

Financial Traps for local governments

October 13, 2014
Banking industry, debt funding, economy, finance, growth, Leadership, local government, management, politics, Revenues, sustainability, Uncategorized
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Some recent reading led me to the following items that seem to crop up when municipalities have fiscal problems that are not otherwise created by the economy or federal or state government decisions:

Assuming high returns of retained earnings (Orange County, CA)

  • Pension systems that are underfunded (Portland OR, and others)
  • Lack of appropriate financial advisors (many)
  • Assuming growth will be exponential
  • Failure to address deterioration of infrastructure (many)
  • Getting involved in complicated credit swaps and revenues tools involving borrowing (Detroit).
  • Declining use by customers that are economically stressed (many)

Food for thought… or caution.

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