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GROWTH CORRIDORS MISSING THE WATER COMPONENT?

June 30, 2013
Development loans, Environment, funding, Holistic Water Planning, infrastructure, innovation, management, planning, Risk, water sewer management
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A recent Manhatten Institute for Policy Research report titled “America’s Growth Corridor: The Key to National Revisal” noted that the future economy in the US will tend to growth in certain corridors, which echos a prior report that identified “super-regions” where population, manufacturing, education and economic growth were likely to be concentrated. Both reports suggest that the super-regions will prosper, with the rest of the country lagging behind. The seven high growth areas in the Mnahatten Institute report are the Pacific Coast, the Northeast, the Front Range, Great Lakes, the southeast/piedmont, Florida/Gulf Coast, and Texas/southern plains. This new report focuses more on the politics of the region, noting that each region is politically fairly consistent internally, indicating there is more than one way to do business. The current business climate, driven primarily by energy favors the Plains, with the southeast starting to import jobs from Japan and Korean as a result of low wage rates. The report goes on to draw a series of political conclusions about business climates and the politics of why growth is occurring in certain areas. But let’s look at a different view of the report. Each of these regions has had “ it’s day in the sun” so to speak, and some a couple of days, like California. Business cycles are cyclical so shifts in growth corridors is not unexpected. However there are some potential limiting issues that are not addressed in the report that are of significant interest or concern.

First, where is the water? Texas and the Plains have significant water limitations, as does much of the southeast. Trying to build an economy when you lack a major resource becomes difficult. That is why the Northeast, Great Lakes and later the Pacific grew earlier than the south, mountain and Gulf states. The Northeast and Great Lakes had water for industrial use and transport of goods, a real key historically for industry. Those regions also had (and still have) better embedded transportation facilities (rail, roads, airports).

The next question is where is the power coming from? The answer that will be given is that the Plains states and Texas have created 40 % of the jobs in the energy sector in the past 4 years so that is where the energy comes from, but having energy and being able to convert it efficiently to power that is useful to people or industry is a different issue. You need water to cool natural gas plants, unless you want to sacrifice a lot of efficiency. Back to water again. Moving the gas to other parts of the country to convert coal or oil plants to natural gas would work, but getting the electricity back does not come without 6% losses and a real need to make major improvements to the electrical grid. Not a small job.

So while the Manhatten Institute reprort suggest that all seven corridors will grow, but that the southern corridors are growing faster, the sustainability of this growth is at question. I recall a similar prediction when I graduated from college in the early 1980s, when the jobs for engineers were limited to the energy fields in Texas and Louisiana and the prediction was that al the industrial growth would be in the south. And then Silicon Valley happened, and then the housing boom in California, Nevada and Florida happened, and a few things in between. Oh and that energy economy collapsed in the late 1980s …. You get the picture. This is not to say that some marketing the power, water and transportation benefits of the historical industrial areas of the north are not needed – they are, but the fact is that there is significant available water, power, transportation and people capacity that is unused. If I am an industry, I may want to look at the power/water issue a little more closely.

PAY YOUR BILL

June 24, 2013
communciations, Development loans, economy, finance, funding, Leadership, management, Marketing water, sustainability
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A recent Wall Street Journal article noted that 50 % or people have paid their utility (water, sewer, electric) bills late, but only 24.8% have paid the internet late, 39.5% the cable late and 44% the phone bill. Really? We are willing to pay water, sewer and electric late, but not the internet bill? This should be a wake-up call to water and sewer utility leaders nation-wide that we have a problem. Combined water and sewer bills across the United States average something around $50. True they are often higher in California, SE Florida, and some other areas, but they are also lower in many areas. Most of the time even in those high cost areas, the bill is under $100.

I have done a number of rate studies and I find that the cable bill, and the cell phone bills are almost always higher than the water+sewer bill locally, so why are people willing to pay our bill late, but not the others? Is it the perceived benevolence of local utilities, most of which are public entities? Is it a perception that water should be free so it is not important to pay the bill? Or is it the lack of marketing of an essential product by waterutilities? I have heard all these arguments, but I am thinking the latter may be more important. Most people know they need to pay the bill, and I don’t really know anyone who thinks water should be free in the US. People are used to cheap water, and costs are going up. Complaining to local elected officials often keeps rates artificially low, which means maintenance and replacement programs get deferred. That makes the utility more at risk to failure. EPA, GAO and others report regularly that we have been keeping rates low and deferring capital and maintenance for years to the tune of hundreds of billions of dollars. So what is wrong?

I suggest that as an industry, we have failed in marketing water. Treatment plants, piping and pump stations are out of the way, pipes are buried. No one sees them and people assume these faciliaites will work, but rarely ask how they work or how long they will work. They do not understand the complexity or the regulatory stringency of operating a utility. They do not understand that the number one priority is public health, and protecting the public health costs money. We have not made people understand this because we do not market our product. I have taught elected official classes where the elected officials tell me public dollars should not be spent on marketing, but they never say why when pressed. Rarely is marketing included in a budget. But if water and sewer is a business, isn’t marketing an important strategy to maintain that business?

Meanwhile we have a host of celebrities marketing cellphones, which are not required to survive. We have a host of glitzy cool advertisements for cable service options, but we don’t need cable to survive. The power companies send out glitzy stuffers in their bills that no one reads, but they do end up in the papers regularly. And power really helps us survive, but we could do without it (although it would be unpleasant). Our forefathers did. But no one ever survived without water. Maybe it is just too obvious. But maybe because it is so obvious, people are less conscious of it. We need to market better. As a private sector marketing manager would say – we have lost our market share!! We need to get it back.

Are Pensions Really Broke?

May 28, 2013
funding, Leadership, management, Uncategorized
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Are Pensions Really Broke?

Nearly 10 years ago it was predicted that the water industry would experience a large exodus of experienced workers.  It did not happen; likely it was only delayed by the 2008 financial crisis.  If that is the case, will there be an acceleration of retirements in the next few years?  If so, what are the plans the plans for knowledge capture? GIS, work orders, MMIS, and other programs will help, but capture is important as the next “generation” of employees will not have the advantage of years of experience in finding valves, and pipes, etc.  We need to plan ahead for the knowledge capture issue, develop training for newer employees and figure a means to access lost knowledge in the future.  Capture is a big issue, but what we hear more of is the potential for a drain on our resources for funding these retirements?  The news is full of stories of dire consequences of retirement defaults coming for the public sector.  Keep in mind many utilities are publically owned and these employees are part of the public retirement systems.  Is this real or a political position for another agenda?  Do we need to be worried?

Interestingly it depends on whether you were looking before 2008 or after.  This picture was very different.  Even in my state of Florida, the pension system was fully funded before 2008, dropped just after, but has returned to near full funding as a result of the improvement in investment returns.  Most of these systems rely on investment returns so changes can cause the system solvency to change rapidly over short periods of time.  Looking only at a short instant in time belies the long-term truth and  it is the longer view we need to look at.  Good thing Wall Street normally goes up, but the impact of poor investment strategies by a limited few (2008) has significant impacts across society in everyone’s pension programs.  Look at all the 401k programs – those incurred crushing blows just as pension programs did.  So yes there may be problems, but many of these pension systems are not nearly as strapped as you would be led to believe in part because they have always relied on people continuing to pay into the system.  Hence they always have cash flow, unlike personal accounts.

The long-term view or the impact on personal accounts doesn’t faze the “fixers” who have many ideas to “fix” the pension problem.  One of the concepts championed is to change enrollment to a 401k vs a fixed benefit system.  Another camp suggests privatizing.  But both radically change the long-term solvency of vested employees and here’s why.  Under the current concept for public retirement systems, your employer and often you, pay matching amounts into the system.  According to a study done some years back in Florida, over 80% of people who get public sector jobs do not stay long enough to become vested in the system.  That means that while they get their contributions back, the retirement system keeps the match, reducing long term costs to the public.  All full time employees pay into the system. Retirement systems rely on cash flow from current employees for payouts to retirees, thereby protecting the invested funds and allowing the system to “weather” periodic financial difficulties.  That’s why the system solvency will based on what is happening on the stock market.  The system is designed to grow at a given rate, so if you reduce the people paying in, you accelerate the use of invested dollars because the cash flow diminishes.  In many respects that is what happened to some of the industrial pension systems –automation and outsourcing jobs overseas cut down the payees so much that the pension system could not sustain itself.  So it’s relatively easy to demonstrate that both cutting jobs through privatizing and 401k type programs accelerate the crisis and will create future burdens on the taxpaying public.  These two solutions sound great, but are simply unsound.

There are other ways to mess up retirement systems.  The federal workforce has decreased from 6.6 million in the late 1960s to 4.5 million today.  Clearly the reduction in employees contributing will have an impact on significant federal pensions.  Florida and many other states, with the windfalls on the late 1990s, reduced vesting from 10 years to 5 or 6.  That means that a greater percent of people will become vested, which means more future obligations.  That’s not a solution for solvency.  Florida’s legislature changed the contributions from only the government entity paying (a total of 10.4%) and required employees to contribute.  The employee match is their money and they get it back with interest, meaning only 7./4% remains in the system.  If experience with social security and other states is an indication, both shares will have to increase so that their combined total will be in the 13-14% range.  How did hat save anyone money?

So what’s the solution?  Two things.  First, the initial way these pension plans were set up were actuarially sound.  They should be revisited for contribution amounts, vesting period and expected return rates on investments (one of social security’s issues is that they own so many Treasury bonds that pay under 2% that it is hard to get a valuable rate of return).  This is a project for experts, not policians to consider and evaluate.  The big issue though is age for retirement. I know this is not popular, but let’s talk social security here as an example.   The text of the 1935 Social Security Act says that benefits were to be granted at age 65 (Section 202).  However the average age that people live to was 60 for men and 64 for women, meaning the average person NEVER collected social security.  Now it is 76 and 81, which means they collect for 12 to 15 years, tremendous difference in the obligations.  We all appreciate good medicine and most look forward to retirement, but keep in mind it comes with a price.  Since 50 is the new 30, we probably will all probably can be working longer.

Water and sewer workers like police and fire, are vital to thriving communities. So, let’s act with caution when looking at fiscal impacts that may come to utilities in the future. Since many of these folks have, and have worked hard to secure a retirement package, it will need to be funded.  But we must act judiciously when making changes to the current program.  Cut off payees – and ratepayers will make up the difference.  Change the type of program, and the potential for major losses occurs.

Does Delaying Decisions on Infrastructure Help Us?

May 21, 2013
Development loans, economy, Environment, funding, infrastructure, innovation, Insurance, Leadership, management, sea level rise, stormwater, sustainability, Tidal flooding, Uncategorized
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If you live on an island, and your groundwater table is tidal, what should your datum be for storm water planning purposes?  Average tide?  High tide?  Seasonal high tide?  If you are the local official with this problem, what do you do, realizing that the difference from mean tide and seasonal high tide (when most flooding occurs) is 1.5 feet?  Realizing that property and infrastructure is at much higher risk for periodic inundation, does the failure to address the problem indicate a lack of willingness, understanding, hope or leadership?  We see all four responses among local officials, but the “head in the sand” mode is the most curious.  It’s tough challenges that often define leaders.  With sea level rise, there is time to plan, construct infrastructure in stages, arrange funding, and lengthen the life of infrastructure and property.  Meanwhile, those insurers, banks and the public we talked about in a prior blog wait and watch.

Planning for Change (like sea level rise)

May 1, 2013
Banking industry, Climate, Development loans, Environment, groundwater, infrastructure, Insurance, Leadership, planning, sanitary sewer, sea level rise, stormwater, sustainability, Uncategorized
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After my last post, I was asked about sea level rise and how to get started with the issue in a very “red” area as it was characterized.  I have come to the conclusion that the insurance industry will make sea level rise real for politicians in those places where it is impermissible for bureaucrats to discuss it.  Here’s why.  Say you have a house in a low lying area that is vulnerable to sea level rise and/or storm surge.  One is permanent, the other temporal, but in both cases are potentially catastrophic if you live in this house.  You bought the house, got a loan for 80 or 90% of its value and then got insurance for it.  Now the insurance is there to insure that if your house gets swept away or damaged, there will be enough money to pay off your loan.  That’ s what many people miss.  Insurance is for the bank, no you, which is why your loan documents require that you get and hold insurance while you have the house.  After your loan is paid off, there is no such requirement.

Now let’s say we are out 20 years.   You have enjoyed your house but have decided to sell it.  Now the banks will value it and are willing to loan say 80% of its value.  They of course assume that the house will increase in value with time so even if you make no improvements, if they have to foreclose on it they will get their money back (a major part of the problem with the financial crisis of 2008 was they banks could not get their money out of the properties).   Even if it doesn’t, as your loan is paid down, their risk decreases.   The loan documents require that you get insurance to cover your costs.

So far so good, but what happens when the insurers will not give you insurance for the full value of the property?  In Florida the State creates Citizen’s to deal with the fact that private, commercial insurers saw too much risk in coastal areas and refused to issue policies.  Now the State and Citizen’s have the risk.  Fine, but that isn’t dealing with the same issue – if the insurer think the value of the property will decrease, or the risk increases a lot, they will not issue policies. Or they will revise policies to say they will pay once – but will not insure you for rebuilding.  You may think this will not happen, but Citizen’s is already discussing this option.  Hence if you lose your house, they will pay you (so you can pay the bank, and then you are on your own.  Now the bank may be willing to offer you a distressed property as an options (Welcome to Detroit), but that won’t be in the same risk zone.

Take this further, let’s say Citizen’s for example says we will pay full value if you lose the house but will not insure a rebuild?  That means they probably will not give insurance to the guy who wants to buy our house in 20 years.  How much is your house worth now?  Probably nothing, which means now the bank will be looking at your insurance coverage and say – whoa – if the house is not worth anything on a resale, that means they may not get paid when you sell your house if you sell if before it is paid off (the norm)!!  That is an unacceptable risk, and they need a solution.  Of course if your house suddenly has no value, it means local governments get no revenue for taxes (good for you, but bad for providing essential services like storm water.  You may not believe this discussion is happening, but it is.

So here’s what I think happens.  I think the banks figure this out and start looking at vulnerability as a part of loans.  I think they start thinking about what the value in 20 or 30 years might be and if they can get their loan monies back out of property.  That will slow property values.  I think the insurance industry does the same, and working with banks will further set the prices acceptable for vulnerable property.  They are not good investments. If you own such property, you may get insurance in the short-term, but long-term your house value may decrease.  At some point, your house will have no resale value, unless……

BUT there iis a big caveat to all this.  Coastal areas are high value markets.  Lots of activity and lots of investment opportunities.  It all depends on what is being done to protect those properties, and depending on the federal governments to bail out private property is unrealistic.  It is a local issues, so I also think the banks and insurance industry will start looking at what local governments are doing to protect investments in private property.  Do they have a sea level rise adaptation plan?  Are the storm water systems updated/upgrades/maintained?  Are roads, water supplies and sewer systems capable of functioning under the changed condition?   Is there a 50 or 100 year vision on how the community adapt to nature?  If yes, there is comfort that investments are protected.  If everyone’s head is buried in denial…..Detroit’s calling.  U-haul anyone?

PS  No disrespect to Detroit, my father’s hometown and the home to many of my current and departed family.  For those who do not know, Detroit is high, has access to lots of water, sewer, roads, power and lots of land at reasonable cost, along with a jobs and manufacturing history.  Perfect opportunity, one not lost on our ancestors.

Barriers to Public Sector Leaders?

April 1, 2013
infrastructure, innovation, Leadership, management, Uncategorized, water sewer management
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One of the issues that arises in the public water utility sector is where are the leaders?  A recent online discussion of the issue identified a number of barriers to public sector leadership, which differentiates the public sector from the private sector.  The three issues were associated with risk tolerance in the public sector which stifles innovation, application of business principles to public sector efforts, and the lack of vision and understanding of consequences.  Related to the latter is the understanding of the various types and perspectives of expertise within the industry.  Over the next three blogs, we will talk about each.  Comments welcome of course.

So the first one.  For the most part, public officials, city managers, finance directors and elected officials, are particularly risk averse individuals as a group.  For one thing, their tenure in any given job is relatively short (city manager are aground 2-3 years).  Elected officials spend much of their time trying to stay in office, so clearly their leadership is guided by public opinion, never a strong point for leadership. Regulatory agencies can only be criticized, so why be innovative? For all three, plus the employees working beneath these folks, their performance is in the public eye and the public is rarely forgiving of continued or significant failures.  However, innovation is often correlated with risk, which suggests that the risk associated with failure may limit the pursuit or acceptance of innovation – instead keep doing what you have been doing because that creates no waves.  Nevermind that the same old way may be inefficient or outdated, the concern is the risk if a new idea fails.  The reality is to “stick with what works,” a mantra that has existed in the industry for many yeas, does not accept innovation easily.  Particularly of issue is organizations where many mid- and often upper division managers avoid decision-making, but may be particularly poignant in pointing out decision failures of others as a means to improve their own stock – “I’ve never made a bad decision.”  But as in baseball, sitting on the bench 0 for 0, means you have never had an at bat, so you have accomplished nothing, while the person who is 6/10 may have accomplished a lot.  It is successful risk taking that may lead to changes in the organization, changes in doing business, improvements in efficiency and new means to accomplish tasks or deliver services.  You need to think “outside the box,” to use an overused euphemism.

So the question is how do we get the public and the public officials to accept risk taking, and to relax their risk averseness?  For innovation to grow, we need leadership, which means risk tolerance.  After all doing the same thing over and over, and expecting different results is the definition of insanity isn’t it?

Should Coastal Utility Master Plans Include Sea Level Rise?

March 21, 2013
Climate, communciations, Environment, finance, funding, infiltration gallery, infrastructure, innovation, Insurance, Leadership, management, planning, riverbank filtrations, sea level rise, stormwater, sustainability, Uncategorized, water sewer management, water supplies
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Planning is a process utilized by utilities in order to reach a vision of the utility as defined by the customers or the governing board, or to meet certain demands for service projected to be required in the future.  Understanding and managing the utility’s assets provides important information related to the ongoing future direction of the utility system.  However, the only method to develop that future direction is through the planning process.  Planning should be undertaken on a regular basis by all enterprises in an effort to anticipate in to anticipate needs, clarify organizational goals, provide direction for the organization to pursue and to communicate each of these to the public.  With water and wastewater utility systems, it is imperative to have ongoing planning activities, as many necessary improvements and programs take months or years to implement and/or complete.  Without a short and long-term plan to accomplish future needs, the utility will suffer errors in direction, build unnecessary or inadequate infrastructure and pursue programs that later are found to provide the wrong information, level of service or type of treatment.

Planning can provide for a number of long-term benefits – improvements in ISO ratings to lower fire insurance rates, renewal of improvements as monies become available, rate stability and most importantly – a “vision” for the utility.  In creating any plan for a utility system, efforts to understand the operating environment in which the utility operates must be undertaken.  Second, the needs of the utility must be defined – generally from growth projections and analyses of current infrastructure condition from repair records or specific investigations.  By funneling this information into the planning process, the result of the effort should be a set of clear goals and objectives needs to be defined (Figure 8.1).  However, the types of goals and objectives may vary depending on the type of plan developed.  There are 4 types of plans that may result from the planning process.

  • Strategic Plans – action oriented for management level decision-making and direction
  • Integrated Resource Plans – Actions for utility management to tie all parts of the system together
  • Facilities Plans – for SRF loans support
  • Master Plans – to support capital improvement programs

Any utility planning effort should start with a description (and understanding) of the local environment (built and otherwise).  An understanding of the environment from which water is drawn or to be discharged is important.  Both water quality and available quantity, whether surface or ground water, are profoundly affected by demand.  A reduced demand for surface water helps prevent degradation of the quality of the resource in times of low precipitation.  Reduction in the pumping of ground water improves the aquifer’s ability to withstand salt water infiltration, potential surface contamination, upconing of poorer quality water, contamination by septic tank leachate, underground storage tank leakage, and leaching hazardous wastes and other pollutants from the surface.  Over-pumping ground water leads denuding the aquifer or to contamination of large sections of the aquifer.  Planning for is necessary for surface water systems.  Therefore, source water protection must be a part of any water planning efforts, including the appropriate application sites and treatment needs for reuse and residuals.

So let’s toss sea level rise into the mix.  What happens when sea level rise inundates coastal areas with saltwater and increase freshwater heads inland?  How do we fix that problem and should be plan for it.  Clearly master planning should include this threat (as applicable), just as any regulatory issue, water limitation, disposal limit or change in business practices should be considered.  One means to reduce the impact of sea level induced groundwater levels is infiltration galleries that may operate 24/7.  These systems are commonly used to dispose of storm water (french drains or exfiltration trenches) but what happens if the flow is reversed?  Water will flow easily into the system, just as it does for riverbank filtration. The water must be disposed of, with limited options, but let’s toss a crazy idea out there – could it be your new water supply?  Just asking, but such a system would not be unprecedented worldwide, only in the coastal communities of the US.

When do we get serious about sea level rise?

March 18, 2013
Banking industry, Climate, Development loans, Environment, finance, groundwater, infrastructure, Insurance, Leadership, management, planning, sanitary sewer, sea level rise, stormwater, sustainability, Tidal flooding, Uncategorized, water sewer management, water supplies
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Based on my last blog, his inquiry came to me.  And I think I actually have an answer:  when bakers and insurance companies decide there is real exposure.  Let’s see why it will take these agencies.  There is very little chance, regardless of good faith efforts, significant expertise, or conscientious bureaucrats to stop growth and development.  The lobby is simply too strong and local officials are looking for ways to raise more revenues.  Development is the easiest way to increase your tax base.  As long as there are no limits placed on develop-ability of properties (and I don’t mean like zoning or concurrency), development will continue.  But let’s see how this plays out.  Say you are in an area that is likely to have the street inundated permanently with water as a result of sea level rise (it could be inland groundwater, not just coastal saltwater).  For a time public works infrastructure can deal with the problem, but ultimately the roadways will not be able to be cleared.  Or say you are located on the coast, and repeated storm events have damaged property.  In both cases the insurance companies will do one of three things:  Refuse to insure the property, insure the property (existing) only for replacement value (i.e. you get the value to replace) but no ability to get replacement insurance, or the premiums will be ridiculous.  We partially have this issue in Florida right now.  Citizen’s is the major insurer.  It’s an insurance pool created by the state to deal with the fact that along the coast, you cannot get commercial insurance.  So Citizens steps in.  The state has limited premiums, and while able to meet its obligations, in a catastrophic storm would be underfunded (of course in theory is should have paid out very little since 2006 since no major hurricanes have hit the state, but that’s another story). 

As the risk increases, Citizens and FEMA, the federal insurer, have a decision to make.  Rebuilding where repeated impacts are likely to happen is a poor use of resources and unlikely to continue.  Beaches and barrier islands will be altered as a result.  The need will be to move people out of these areas, so the option above that will be selected will be to pay to replace (move inland or somewhere else).  Then the banks will sit up.  The banks will see that the value of these properties will not increase.  In fact they will decline almost immediately if the insurance agencies say we pay only to relocate.  That means that if the borrowers refuse to pay, the bank may not be able to get its money out of the deal on a resale.  We have seen the impact on banks from the loss of property values as a result of bad loans.  We are unlikely to see banks engage in similar risks in the future and unlikely to see the federal insurers (Fannie Mae, Freddie Mac) or commercial re-insurers like AIG be willing to underwrite these risks.   So where insurance is restricted, borrowing will be limited and borrowing time reduced.  That will have a drastic impact on development.  The question is what local officials will do about it?

There are options to adapt to sea level rise, and both banking and insurance industries will be paying close attention in future years.  Local agencies will need a sea level rise adaptation plan, including policies restricting development, a plan to adapt to changing sea and ground water levels including pumping systems to create soil storage capacity, moving water and sewer systems, abandoning roadways, and the like, and hardening vulnerable treatment plants.  Few local agencies have these plans in place.  Many local officials along the Gulf states refuse to acknowledge the risk.  What does that say about their prospects?  Those who plan ahead will benefit.  Southeast Florid a is one of those regions that is planning, but it is slow process and we are only in the early stages.

Market or be Outmarketed

March 10, 2013
communciations, finance, funding, Leadership, Marketing water, sustainability, Uncategorized, water supplies
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Municipal drinking water is strictly regulated by the USEPA.  We spend a lot of time testing our water, producing reports, and providing our customers with information on our results.  The results show it works, because the number of incidents of contaminated water are few, and rarely affect larger utility systems.  We are so good at providing water that the public expects their water to be safe, yet the buy bottled water?  Wait, huh?  Bottled water? Bottled water is not regulated by the USEPA and is not subject to the same requirements as potable water.  There are less than three full time people at FDA inspecting bottled water facilities, versus thousands reviewing public water supplies.  Water utilities run millions of analyses per year and must publish the results.  So why do they buy bottled water when our water is safe?

Keep in mind that in many areas of the world, the bottled water industries move in and compete for the same supplies as we currently use.  North Florida is rife with arguments over flows to springs as are other areas.  Some of the water is simply repackaged tap water.  So in addition to competing for our customers, they are competing with the sustainability of our drinking water supplies.  Then there are the hundreds of thousands of bottles that end up in landfills.  More impact on sustainability.  At the same time, bottled water is more costly that gasoline, which everyone complains about, but that does not stop the purchases?  So what’s up?

Marketing that’s what.  We don’t market water.  I noted in an earlier blog that we simply don’t market our product, which has allowed others to compete for the same dollars.  Customers complain about rate hikes, (averaging about 5% per year for the past 10 years according to the new AWWA study), yet they happily pay over $4/gallons for many of the popular bottled waters, more and more cable channels, fancy phones, etc.  Not that any of these commercial products are per se bad, but none are required for survival like water.

Interestingly when we do market, it reaps positive results.  New York and San Francisco have seen the wisdom of marketing for year.  They ship New York tap water to Florida to make Brooklyn style bagel because Florida Water doesn’t taste the same.  DC Water changed its name, and began a marketing campaign that changed public perception of the utility and has allowed it to start dealing with its infrastructure backlog.  Some of their ideas include branding the water, and having restaurants serve it in marked glasses, paid for by the utility.  Signs on drinking fountains, in schools and even sales of tap water in stores are options some utilities have started.  But the key is started.  Marketing takes dollars, to reap benefits.  Who knows, maybe tap water is the next bottled water….

Planning the Future or Not?

March 2, 2013
Climate, communciations, finance, funding, groundwater, infrastructure, Leadership, management, planning, power demands, power-water nexus, sustainability, Uncategorized
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Many of you will remember in the 1980s there was a book called Megatrends by John Naisbett, and a later update called Megatrends 2000 and a host of other megatrend documents.  The concept was to look for global or national trends that might impact out future.  I recalled this while I was reading an article from Forbes and Public Works magazines recently talking about the future, and development of megaregions.  They project 11 megaregions in the US that will develop by 2050.  Most are in process already and are familiar:  1) Pacific Northwest (Vancouver to Portland), 2) Bay Delta, 3) Southern California, 4) Front range (Cheyenne to Albuquerque, 5) Phoenix/Tucson, 6) Texas Triangle (Houston-Dallas-San Antonio, 7)  Gulf Coast (Houston to Mobile), 8)  Florida (I-4/I95), 9)  Piedmont (Atlanta to Raleigh), 10)  Northeast (Washington DC to Boston), and 11) southern Great Lakes (the old “Rust Belt”).  If you are looking for economic growth, all signs point to these 11 region.  Most are located along interstates which makes transportation by truck easier.  Several have port access and most rail.  The projection is for more people to move from the rural areas to these regions, and for the influx of immigrants to likewise migrate here.  But an issue not noted as a part of these projection is that only three of them are not water limited, and those three include the two oldest regions:  Rust Belt stats and the northeast where there is water.  In addition, three of these areas are characterized by potential adverse climate impacts (Pacific Northwest, Texas, and Front Range) that will adversely impact their future water availability.  In all but the historical cases, embedded power availability is lacking, creating competing interests with the water industry.  So where is the planning and forecasting models for 2050 and beyond for these regions?  Some jurisdictions have seen attacks on traditional planning activities as unduly limiting development, implement specific agendas, and other nefarious reasons.  Florida scrapped most of its growth management/concurrency requirements in this vein.  After all, why should you insure there is water in order to issue development permits right?  That might limit development! Why not manage an aquifer for 100 years, to insure a 100 year supply, not to insure the supply remains available indefinitely.  Both short term goals conflict with the theory of constraints which says that any system is limited in achieving its goals by a very small number of constraints; kinda the old idiom “a chain is no stronger than its weakest link.”  The concept requires the application and investigation of the situation in enough detail to gain an understanding of the constraints and to construct an optimized solution.  Keep in mind that often maximizing certain goals, will cause others to suffer.  A familiar example, you can have construction occur fast and with high value, but not at a low price.  You can achieve certain reliability of water supplies, and improve economics, but you need to understand other impacts.  Too often planners focus on meeting the goals of the client, while ignoring competing goals, which ultimately leads to greater costs down the line.  As these megaregions are well on their way to development, we need to begin the process (a bit late, but better late than never) to understand the limitations each region will face with respect to water supplies and how those water supplies impact competing economies.  Failure to do so could create constraints within the regions that restrict their growth and economic potential.