Tag Archives: economy

Every water body will be different but in southeast Florida there are a couple options for Lake Okeechobee’s waters.  One option has been in discussion for years – buy back the EAA lands and restore the Everglades flow.  That has two benefits – improved water quality, and less potential for east-west releases.  The downside is cost.  But the sugar industry knows that the muck layer is decreasing and there are plans to develop the EAA into hundreds of thousands of housing units.  That was not the intention in the 1940s when the EAA was created, but trying to stop someone from developing land, especially when the lake communities are challenged economically, is difficult.  Buying the land would remove it from production, but decrease tax revenues.  And it would need to be managed with no guarantee that it would cleaned up quickly.

The alternative?  The South Florida Sun-Sentinel had a front page article that is a little scary.  The figure below is reproduced from that article.  The discussion was if there is no conservation/public purchase of land, Florida may look very different.  The impact of not buying the land is development.  More people.  More taxes.  More stormwater.  The fertilizer does not go away – it now fertilizes lawns and golf courses.  Add wastewater, and human activities.  We find that urban living and farming can have similar impacts from a nutrient perspective.  So development may exacerbate the problem and given that our modeling indicates that sea level rise imperils inland communities from groundwater, this is not a solution to coastal risk.  Given limitations with local governments inland, it may create a larger crisis.  All there things need discussion, but the question is – will the algal issues on the coast improve?

graphic-of-development worse?

The term algae encompass a variety of simple structures, from single-celled phytoplankton floating in the water, to large seaweeds.  Algae can be single-celled, filamentous or plant-like, anchored to the bottom.  Algae are aquatic, plant-like organisms – phytoplankton.  Phytoplankton provides the basis for the whole marine food chain. Phytoplankton need light to photosynthesize so will therefore float near the top of the water, where sunlight reaches it.  Light is the most limiting factor for algal growth, followed by nitrogen and phosphorus limitations), but other nutrients are required including carbon, silica, and other micronutrients. These microscopic organisms are common in coastal areas.  They proliferate through cell division.

A natural progression occurs in many water bodies, from diatoms, to green algae to yellow/brown to blue-green, with time and temperature.  The environment is important.  Southern waters are characterized as being slow moving, and warm.  This encourages cyanobacteria – or blue green algae.  The introduction of nutrients is particularly difficult as it accelerates the formation of the blue green algae. Blue-green algae creates the bright green color, but is actually an end-of-progression organism.

If cells are present in the water mass in large numbers an algal bloom occurs.  An algal bloom is simply a rapid increase in the population of algae in an aquatic system. Blooms may occur in freshwater as well as marine environments. Colors observed are green, bright green, brown, yellowish-brown, or red, although typically only one or a few phytoplankton species are involved and some blooms may be recognized by discoloration of the water resulting from the high density of pigmented cells.

So the desire for development created the idea to drain the swamp, which led to exposure of dark, productive soil that led to farming, which lead to fertilizers, which led to too much water, and water pollution leading to algae.  A nice, predictable progression created by people.  So what is the solution?

WTPspiractorI have a question – what was the impact of the 2008 economic crisis on water and sewer infrastructure funding?  I have a hypothesis – the amount of monies transferred to non-water and sewer operations increased.  Is the hypothesis true?

The next question to answer is that if transfer monies increased, did they decrease once property values started to come back?  My hypothesis is no.

Finally what impact does this have on water and sewer infrastructure going forward?  I suspect that the answer is that we underfund infrastructure or justify the lack of funding through actuarial means (I actually had a utility director tell me that his pipes were designed to last 250 years.  Seriously.  Of course that is nonsense, but it is a means to keep your need for replacement funding down).

I have a student and we are working on these issues now.  We are going to gather data from several hundred utilities over the next six months, crunch 11 years of data and let’s find out.  If you or your clients are interested in adding your data to the mix, please send it to me.  I need 2005 -2015 expenditure info.  Also some operational data like ADF, MDF, miles of pipe, customers, treatment type and CCR. We will be publishing the results.   Should be interesting……


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…..?


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.

I love South Park.  Parody on the ridiculous stuff that goes on every day.  Most of the time the writers hit the target.  And I laugh.  There is an episode of South Park where the residents cry out about immigrants that “took ‘r jobs!!”  And then they go on to “rabble rabble rabble” because they don’t know what else to do.  And of course in the Republican debates, the illegal immigrant issue has arisen.  But how big a problem is this really?  And are these jobs Americans really want to do, or is the illegal immigrant market basically taken the bottom rung because today’s workers don’t want those jobs.

So first, what are those jobs? Steven A. Camarota and Karen Zeigler at the Center for Immigration Studies analyzed the census data from 2010 and found there to be 472 “professions” that could be categorized. Of the 472 civilian occupations, only six would be categorized as being “majority immigrant (legal and illegal).” The six are:

  • Plasterers,
  • Personal appearance workers
  • Sewing machine operators
  • Garment manufacturing, and
  • Agricultural occupations (2)

They note that these six occupations account for 1 percent of the total U.S. workforce and that even in those fields, native-born Americans still comprise 46 percent of workers even in these occupations.  In high-immigrant occupations, 59 percent of the natives have no education beyond high school, compared to 31 percent of the rest of the labor force.

Many jobs often thought to be overwhelmingly immigrant (legal and illegal) are in fact majority native-born:

  • Maids and housekeepers: 51 percent native-born
  • Taxi drivers and chauffeurs: 58 percent native-born
  • Butchers and meat processors: 63 percent native-born
  • Grounds maintenance workers: 64 percent native-born
  • Construction laborers: 66 percent native-born
  • Porters, bellhops, and concierges: 72 percent native-born
  • Janitors: 73 percent native-born

There are 67 occupations in which 25 percent or more of workers are immigrants (legal and illegal). In these high-immigrant occupations, there are still 16.5 million natives — accounting for one out of eight natives in the labor force.

Illegal immigrants work mostly in construction, cleaning, maintenance, food service, garment manufacturing, and agricultural occupations. They found no occupations in the United States in which a majority of workers are illegal immigrants. Even in the overwhelming majority of workers even in these areas are native-born or legal immigrants.

So then the question really is this – are they taking jobs that Americans want to do?  Historically the answer is no.  Both the agricultural and garment industries have struggled to get native workers.  The work is long, hard, and conditions difficult.  If you have education, you can find a better, higher paying job.  No American kids grows up wanting to pick beans or sew for a living.  Immigrants have always been the source of labor.  Plasterers are difficult to find when construction jobs are plentiful so that is the one exception to low paying jobs that no one wants to do.  Construction has always looked for labor help and certain specialties. And there are not that many of these jobs in comparison to the others on the list.  So for those 5 jobs the answer is no.  Same goes for most of the next seven (Maids, housekeepers, janitors, bellmen, etc.).  I should note that my great grandmother (an immigrant) cleaned houses, but made sure none of her kids would by making them get an education.  Ditto for my uncle who was a janitor.  Neither was well educated, but their kids were.  And there kids were far better  off economically.

So political rhetoric aside, the answer seems to be that immigrants do in fat take those jobs that we do not want to do that require less education.  These jobs mostly pay minimum wage. The study notes that 59 percent of the natives have no education beyond high school, compared to 31 percent of the rest of the labor force.   Get educated – get a job that pays better than minimum wage.  Seems like I have heard that rhetoric as well.

Bernie Sanders wants a $15 minimum wage law.  Voters in Seattle have agreed.  Starbucks and a variety of others companies have acted.  The change is great for the many low wage earners who struggle to get by working multiple part-time, minimum wage jobs.  Low wages are a drain on the talents of society who struggle with juggling food, medicine, education, shelter and other costs while supporting families. Since 1980, the actual wage rates, when adjusted for inflation, have fallen form many people, shrinking the middle class and expanding the number of economically challenged.  Economic challenges lead directly to social, and health vulnerability.  If you want to cut medical costs, increase the standard of living for people at the lower income levels. You want to sell more stuff, create more disposable income for people to spend across all income levels, not just at the top.   Ditto if you want to have less debt, and more savings.  That is what the intent was in the 1960s under the reforms of the “Great Society.”   Progress started, then 1980 showed up and many reforms were reversed before the trends could really show.  Not that those 1960s ideas were perfect, but clearly the last 30 years has shown the reversal is not unless you are among the 0.1%.

As an example, back in the day, fast food restaurants were the purview of students, not twenty and thirty something adults and grandma.  These were low income jobs, and have remained so.  The intent was not to make these jobs “permanent.”  But they have become jobs for adults.  Back in the day there were more workers, more customer service and more food prep.  Over the years, though, ingredients started to arrive packaged and pre-mixed, so that the only labor was to heat it up, bag it and hand it out the window.  Fast food is now packaged at factories in mass production which requires less labor. Less jobs, same low pay. Gas station attendants were also commonly kids, who washed your windows, checked your oil and pumped your gas (no, really they did!).  They got paid minimum wage as well. Not anymore – that was too costly and got cut.  The list goes on.  Customer service is apparently only important if you are trying  to attract customers.

So now more adults are in these industries, and many must work multiple jobs to make ends meet.  So a higher wage is welcome news.  Or is it?  Let’s see what happens when the wage doubles up without increased growth.  Well, the gas station attendants that used to pump gas were replaced with computers.  You even have gas stations that are completely automated – no people!.  You have computers putting in orders now at restaurants.  About 30 percent of the restaurant industry’s costs come from salaries, so could burger-flipping robots and computer ordering system like some restaurants already employ, become more cost-competitive and may displace more workers if the current federal minimum wage of $7.25 an hour is doubled.  At risk are 2.4 million wait staffers, 3 million cooks and food preparers and 3.3 million cashiers.

So where will we see this?  Electronic menus can be constantly updated so that items that are out of stock can be removed. Connecting the point of the sale to the oven’s operating system allows precise amounts of food to be cooked, which helps cut down on costs. Other inventions save energy, reduce maintenance and better dispose of grease. On the digital side, restaurants are working on apps that include reward systems and location tracking that prompt customers to eat with them more frequently. Olive Garden said earlier this year that it would roll out the Ziosk system at all its restaurants, which means that all a server has to do is bring out the food.  The employees would be reduced to fixing things when they break.  That could be a lot less employment.

Corporations have a priority to make money, which can mean cutting costs and becoming more efficient.  Bottom line profits are king, not people. See GM, VW and others who ignored defects in their products, preferring to pay the costs of the lawsuits as opposed to fixing the defect.   So the $15 minimum wage will be cheered by those making less, but jeered by low margin corporations that will be forced to raise prices and become more efficient.  Too often those changes do not include paying people – at least in this country.  The winner will be……. to soon to tell, but I won’t bet against the corporations.

Most states were doing pretty well before the 2008 recession hit, but that ended in 2009. Most states had to make extremely difficult cuts or raise taxes, which was politically unacceptable. Of course invested pension systems received a lot of attention as their value dropped and long term sufficiency deteriorated, which was fodder for many changes in pensions, albeit not how they were invested. The good news is a lot of them came back in the ensuing 5 years, but 2015 may be different. A number of states have reported low earnings in 2015 and whether this may be the start of another recession. The U.S. economy has averaged a recession every six years since WWII and it has been almost seven years since the last contraction. With China devaluing their currency, this may upset the economic engine. At present there are analysts on Wall Street who suggest that some stocks may be overvalued, just like in 1999. If so, that does not bode well states like Illinois, Kansas, New Jersey, Louisiana, Alaska and Pennsylvania that are dealing with significant imbalances between their expenses and incomes. Alaska has most of its revenue tied to oil, so when oil prices go down (good for most of us), it is a huge problem for Alaska that gives $2200 to every citizen in the state. An economic downturn portends poorly for the no tax, pro-business experiment in Kansas that has been unsuccessful in attracting the large influx of new businesses, or even expansion of current ones. California and next door Missouri, often chided by Kansas lawmakers as how not to do business, outperform Kansas.

Ultimately the issue that lawmakers must face at the state and as a result the local level is that tax rates may not be high enough to generate the funds needed to operate government and protect the states against economic down turns. There is a “sweet spot” where funds are enough, to deal with short and long term needs, but starving government come back to haunt these same policy makers when the economy dips.   It would be a difficult day for a state to declare bankruptcy because lawmakers refuse to raise taxes and fees.

Your grandma always told you to save money for a rainy day.  She wasn’t really talking about rainy days, but days when you had less or no income.  The press talks about the huge percentage of Americans that have little or no savings, and how compared to other countries, we are at a disadvantage during economic times.  A huge problem is that the same argument can be translated to governments, which must provide services, and often more services during economic downturns.  But if they have no savings, how are they to accomplish this?  They do not want to raise taxes and fees in down situations, so won’t the loss of services just make things worse?

A recent PEW reports suggests that states “had about half the reserves necessary to address budget gaps during the first year of the Great Recession.  The 50 states had about $60 billion set aside in the summer of 2008, but in fiscal 2009, budget gaps across the country totaled $117 billion, about twice what states had in reserve. The budget gaps continued to grow in 2010 and many states struggled with shortfalls for years afterward.  Bad news, but the news really does not improve.  They report that 37 states have legal caps that prevent them from saving enough to weather recessions or even enough to substantially offset revenue losses, and most of those are based on some percentage of the prior year’s revenues.  Why?  Short-term views?  Most governments figure on keeping enough cash on hand to pay bills during tax seasons. That accounts for 60-90 days of funds.  Far too little for dealing with economic impacts.  Far too few state governments recognize the importance of saving, figuring that cutting taxes during time of plenty and giving back to taxpayers is a better use of funds.  Then it is someone else’s issue when the next economic hiccup occurs – and it will.  Unless you raise your cap now as Minnesota and Virginia have recently done.

But the issue is not just a state issue.  It is a local and a utility issue as well.  Local governments are closer to the ground, have less leeway in their budgets and often have far too little funding as a result of resistance to raising property taxes, user fees and over-dependence on state shared sales tax, which often drops precipitously during a recession.  Same goes for sin and gas tax dependence.  When people slow smoking, or as oil prices drop, so do revenues.  Ask Alaska, Louisiana, Kansas, Texas, North Dakota and others that are oil rich states about their budget this past year.  The legislatures were begging Grover Norquist to let them out of their no tax increase pledges.  He said no of course, because he doesn’t want government to function properly.  So those legislators were stuck in the either “do the right thing” or “get whacked by Grover in the next election” conundrum.  You know what they did because they want to get re-elected  That doesn’t help the citizens of those states.  Standard & Poor’s revised its outlook on Alaska’s general obligation and appropriation-backed debt from stable to negative. That will cost them in the future. St. Louis, Moody’s downgraded the city’s credit rating one step to A1, citing “the city’s weak socioeconomic profile; reliance on earnings taxes which are due for voter reauthorization in 2016.”  Diversity in industry and taxes is beneficial.  Too often this gets lost in the desire to do more with less, but doing more means you need more funding!  And you need to collect those savings as grandma counselled!

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