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Musings to Start February

February 15, 2015
communciations, engineering, Environment, groundwater, infrastructure, Leadership, Responsibility
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It’s February already!  Where has the year gone?  My apologies for a January without posts.  Things have been busy here and well, blogging got put on the back burner for me with the new semester starting and a new class to design.  But interesting kernels from January:

The World is Trying to Kill You – Dr. Neil deGrasse Tyson

If you have a 20% failure rate, does that make a speculative technology a waste of time?  Conversely if your success is 20% is it successful?   I think no and no.

Have you noticed that February is the month we have been getting the worst winter weather in the Midwest and northeast? Not December or January?  I used to shovel snow all January and wait for the February respite.

Killer whales are now a protected species.  What does that say about the killer whales as SeaWorld?

There is a honeybee crisis.  No really, a real one.  Not the Jerry Seinfeld movie.  But the lesson is the same.  No bees, no food.  We need to figure out how we are killing them.  No doubt when we find out it will come back on pesticides, herbicides, monocultures, some combination of the above.  Not a good thing for farming.

The bison are under attack again in Montana.  Maybe Mother Nature is trying to tell us something – buffalo want to roam to their winter grazing fields.   And no brucelliosis, the issue rancher bring up as to why the bison are bad, has still NEVER been transmitted from bison to cattle.  Bison are way better on the land since there hooves are much large and they do not compact the ground as much.  But they are not as stupid as cattle.  They know they can walk thought a barbed wire fence.  They are bison afterall!

A Utah rancher shot and killed Echo, the female wolf that made it to the Grand Canyon last summer and became a national story.  He thought she was a coyote.  Um, I think wolves are a little bit bigger than coyotes.  We have a man with a gun who can’t tell what he’s shooting.  What could possibly go wrong with that?

Then there is the bear hunt in Florida because people move closer to the woods and cannot figure out how to secure their garbage of close their garage doors.  Bears get killed.  People…..

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Miami Beach installed $40 million dollars in pumps last summer, with an expected $300 million for.  The nearshore nutrient concentrations increased dramatically (a factor of six), which could adversely impact beach quality, fishing and reefs.  Unintended consequences, but an issue was brought up as a potential concern.

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

WATCH YOUR DATA

October 20, 2014
economy, electronic data, finance, innovation, Leadership, local government, predators, Risk, Uncategorized
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Ray Rice gets video-taped punching out his wife in an elevator in a casino.  Wes Welker gets videotaped at the Kentucky Derby looking like he has imbibed a bit too much.  We have couple students that, well, let’s just say those photos won’t help them get jobs.  And everyday people are You-tubed doing stupid things they wouldn’t want to get caught doing.  And hackers download photos of celebrities in various states of undress that they thought were secure.  We do not understand the Cloud and we do not understand all the wires that make the internet a useful and productive tool that houses the cloud.  The internet is a great information sharing tool, but almost anything is exchangeable.  To date the internet is open to all, but the wires are owned by corporations.  If you watched the 60 Minutes episode recently with Michael Lewis as he talked about Wall street brokers gaming the stock market by using internet cabling to accelerate their access to your data (his book is Flash Boys), you should not be surprise if corporations won’t want to restrict those tools that help them, including cables and satellites.  Jim Hightower in a recent Lowdown newsletter outlines the reasons we should be watching the mergers of the large entities like Time-Warner who own and therefore control the internet connections.  They can and will impose fees for access of certain types.  Instead of equal access, those who pay can and will receive preferential connections.  They also will get access to data.  Wall Street saw the benefit of using the wiring and cloud and data sharing to their advantage, even when it is your data, so certainly these media giants know all about it.  It makes sense form a business perspective.  It works against you, me and our local water and sewer utilities who do not have the luxury of being able to pay and pay for better access.  Keep it on your radar screens – at home and at work.  Keep in mind deregulation and merger of the airlines didn’t reduce air fares or make service necessarily better.

Post Recession Good News

September 29, 2014
finance, funding, Leadership, local government, management, planning, politics, Responsibility, Revenues, sanitary sewer, Uncategorized, utilities, Water Funding
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The National League of Cities reports that nearly ¾ of municipalities are better off in2013 than they were in 2012.  In Broward County, over half the cities actually have more revenue in 2013 than they did in 2006.  Property values are up in 72% of Counties, and real estate activity was high in 2012 and 2013, although it has slowed in 2014.   Nearly 60% of the municipalities were not projected deferral of capital improvements, although 1/3 expect to reduce maintenance and 40% to defer capital.  The biggest challenge cities identified was street condition (23%, followed by sewer, stormwater and water although these were all under 16% which is a bit disappointing given the condition of much of this infrastructure).  Money remained their biggest challenge.  Total local government budgets are $3 trillion, and the bond market Is a robust $3.7 trillion.  New construction for local water, sewer and stormwater infrastructure is expected to reach $750 billion in 2014, with 3.2 and 4.8 billion respectively for water and sanitary sewer.

Pensions are the biggest liability and one that is critical for many local entities with their own pension plans (like Detroit).  Many others have or will migrate to a state plan, or were already part of a state plan.  Having a large pool off employees decreases risk to the pension plan and increased revenues (and future outlays).  Pension plans or Ponzi schemes?  Now that is the question….

DECREASING WATER DEMANDS VS INFRASTRUCTURE NEEDS

September 24, 2014
Banking industry, borrowing for infrastructure, Congress, contractors, debt funding, economy, engineering, finance, funding, growth, infrastructure, Leadership, local government, planning, politics, Reserve Funding, Risk, sanitary sewer, Uncategorized, Water Funding, water sewer management
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Earlier this year the Journal for AWWA had several articles about water use and infrastructure needs.  One of the major concerns that has arisen in older communities, especially in the Rust Belt and the West is that demands per person have decreased.  There are a number of reasons for this –the 1992 Energy Policy Act changes to plumbing codes that implemented low flush fixtures, the realization in the west that water supplies are finite and conservation is cheaper than new supplies, a decline in population, deindustrialization, and climate induced needs.  But all add up to the result that total water use has not really changed over the past 30 years and in many locales, water sales may have decreased.  Water utilities rely on water sales for revenues so any decrease in sales must be met with an increase in cost.  Price elasticity suggests the increase will be met with another decrease in sales, etc.  It is a difficult circle to deal with.  So less water, whether through deliberate water conservation or other means, creates a water revenue dilemma for utilities.  A concern about conserving to much and eliminating slack in the system also results.

Less water means less money for infrastructure.  Communities do not see a need for new infrastructure because there are fewer new people to serve.  Replacing old infrastructure has always been a more difficult sell because “I already have service, why should I be paying for more service” is a common cry, unless you are in my neighborhood where the water pipes keep breaking and we are begging the City to install new lines (they are on my street J)  Educating customers about the water (and sewer) system are needed to help resident understand the impacts, and risk they face as infrastructure ages.  They also want to understand that the solutions are “permanent” meaning that in 5 or 10 years we won’t be back to do more work.  Elected officials and projected elected officials (the tough one) should be engaged in this discussion because they should all be on the same page in selling the ideas to the public.  And the needs are big.  We are looking at $1 trillion just for water line replacement by 2050 and that is probably a low number(2010 dollars).  The biggest needs are in the south where infrastructure will start hitting its expected life.  The south want west will also be looking for about $700 billion in growth needs as well.  All this will cause a need for higher rates, especially with ¼ less low interest SRF funds avaialalbe this year from Congress.

Responsibility, Failure and the Lack of Funds

September 20, 2014
borrowing for infrastructure, Climate, communciations, Congress, debt funding, Economic Bubbles, economy, funding, growth, infrastructure, innovation, JObs, Leadership, local government, planning, politics, Responsibility, Revenues, Risk, Uncategorized, Water Funding, water sewer management
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Public water and sewer systems have the responsibility to protect the health, safety and welfare of the public they serve, just as engineers do.  This is includes not just complying with regulatory mandates (they are minimum standards), but enacting such precautions as are needed to address things not included in the regs.  Unfortunately we continue to pay too much attention on regulatory compliance and evaluate the condition of the system using unaccounted for water losses or leaks fixed in the system as a measure of condition.  That may be an incorrect assumption.  The problem is that unless we understand how the system operates, including how it deteriorates with time, the data from the past may well be at odds with the reality of the future.  For example, that leak in your roof can be a simple irritation for a long time if you ignore it.  But ignoring it creates considerable potential for damage, including roof failure if too much of the structure underneath is damaged.  With a water system, pipes will provide good service for many years will minimal indication of deterioration.  Then things will happen, but there is little data to indicate a pattern.  But like your roof leak, the damage has been done and the leaks are an indication of the potential for failure.  Bacteria, color, pressure problems and flow volumes are all indicators of potential problems, but long-term tracking is needed to determine develop statistical tools that can help with identifying end of life events.  Basic tools like graphs will not help here.

Construction to repair and replace local water, sewer and stormwater infrastructure is expected to reach $3.2 and $4.8 billion respectively for water and sanitary sewer. The federal SRF programs are only $1.7 Billion in SRF loans, 24% below 2012 and well below the levels identified by the federal government to sustain infrastructure condition.  The only reason for the decrease seems to be a demand by Congress to reduce budgets, especially EPA’s budget where this money resides.  But the 2008 recession and its lingering effects to date have deferred a significant amount of infrastructure investments, and the forecast does not rectify the past deficits, and likely does not address the current needs either.  Few water and sewer systems are flush with funds to update infrastructure and borrowing has become a difficult sell for many public officials.  Lake Worth, FL just had a $60 million bond issue for infrastructure redevelopment defeated by voters two weeks ago.  The officials know they need this infrastructure, but the public is unconvinced because few serious problems have occurred.  We have to get the public past this view so we can improve reliability and public safety.  Those are the arguments we need to demonstrate.  The question is how.

 

It’s Budget Time Again

July 14, 2014
debt funding, economy, finance, funding, planning, Reserve Funding, reserves, Revenues, Risk, Rural Utilities, Surpluses
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The good news is that for many local governments, property values are up and so is the economy, especially in urban areas.  However that does not mean that the budget approval difficulties of 2009-2012 have passed or been resolved.  In fact the arguments may continue despite improvements in financial position.  Why?  There are a number of policies that were implemented in the recession years that were especially difficult for utilities:

  1. Borrowed or transferred water and sewer monies to avoid raising taxes against falling property values (note that raising taxes on falling values would have yielded a zero sum game, but raising taxes commensurate might have “un”elected a few people
  2. Failing to have long-term financial plan and even fewer have multiyear budgets.  Included are automatic rate adjustments that some are questioning or deferring now, despite having been approved several years ago
  3. Bad investments – public or private.  In either case, if the revenues are not realized, the local entity gains no benefit.  This can include public private infrastructure investments, privatization or investing cash.  Scenarios need to be created to figure out what happens when things don’t go as planned.
  4. Failing to save for a rainy day before the crash.  Our grandparents knew we need to save for a rainy day.  We talk about the lowered level of savings among Americans and the potential issues that could arise if economic difficulties occur.  So exactly why do our elected leaders think it is a great idea not to collect monies in good times for a rainy day?  Other than politics that is?

 

We have identified four errors in public policy at the local level.  The questions for the 2015 budget are:

 

  1. Can we repay those funds we “borrowed” from during the down years?
  2. Can we keep the total revenues increasing (may not mean a tax increase, but certainly not a rollback)?
  3. Can we develop realistic scenarios for public investments.  Nothing worse than stranded infrastructure like that $6milion parking garage that grossed under $100 in the last 6 months because no one uses it because there is not business need for it.
  4. Can we develop reserve policies that allow local governments and especially utilities to create and maintain repair and replacement funds, reserves, and “savings” for the next rainy day.  It’s coming.  At some point.
  5. Can we develop a 5 year plan of where the community vision is?

I think this would be a start for a lot of us.

Sea Level Rise Planning Part 2

June 26, 2014
Climate, communciations, economy, engineering, Environment, Flooding, infrastructure, innovation, Leadership, local government, management, planning, politics, Risk, Risk Management, sea level rise, stormwater, Uncategorized, utilities, water sewer management
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In the last blog we discussed 10 planning steps for sea level rises.  When planning 50-100 years other factors can come into play as well.  As a result, to allow flexibility in the analysis due to the range of increases within the different time periods, an approach that uses incremental increases of 1, 2, and 3 feet of SLR is suggested.  Hence infrastructure is built to meet milestones, not arbitrary dates lessening the potential for stranded assets.. The increments can work as threshold values in planning considerations in terms of allowing planners the ability to know ahead of time where the next set of vulnerable areas will be to allow a for proactive response approach that can be matched to the observed future sea levels.

But prior to developing infrastructure plans, the local community needs to define an acceptable level of service (LOS) for the community. A level service would indicate how often it is acceptable for flooding to occur in a community on an annual basis.  1% is 4 days per years and for a place like Miami Beach, this is nearly 2 ft NAVD88, well above the mean high tide.  The failure to establish an acceptable LOS is often the cause of failure or loss of confidence in a plan at a later point in time.  The effects of SLR of the level of service should be used to update the mapping to demonstrate how the level of service changes, so that a long-term LOS can be defined and used for near-term planning.

With the LOS known, the vulnerability assessment is developed using a GIS based map of topography and the groundwater levels associated with wet and dry season water levels.  LiDAR is a useful tool that may be available at very high resolution in coastal areas.  Topographic maps must be “ground-truthed” by tying it to local benchmarks and transportation plans.  USGS groundwater and NOAA tidal data from local monitoring stations to correlate with the groundwater information. Based on the results of these efforts, the GIS-based mapping will provide areas of likely flooding.

GIS map should be updated with layers of information for water mains, sewer mains, canals, catch basins, weirs and stormwater facilities.  Updating with critical infrastructure will provide a view of vulnerability of critical infrastructure that will be funded by the public sector. Ultimately policy makers will need more information to prioritize the needed improvements.  For example, a major goal may be to reduce Economic Vulnerability.  This means identifying where economic activity occurs and potential jobs.  At-risk populations, valuable property (tax base) and emergency response may be drivers, which means data from other sources should be added.

The next step is to analyze vulnerability spatially, by overlaying development priorities with expected climate change on GIS maps to identify hotspots where adaptation activities should be focused. This effort includes identification of the critical data gaps which, when filled, will enable more precise identification of at risk infrastructure and predictions of impacts on physical infrastructure and on communities. The final deliverable will include descriptions of the recommended concepts including schematics, cost estimates, and implementation plan.

So why go through all this.  Let’s go back to the beginning.  It has to do with community confidence in its leaders.  Resident look at whether their property will be protected.  Businesses look at long-term viability when making decisions about relocating enterprises.  The insurance industry, which has traditionally been focused on a one year vision of risk, is beginning to discuss long-term risks and not insuring property rebuild is risk-prone areas.  That will affect how bankers look at lending practices, which likely will decrease property values.  Hence it is in the community’s interests to develop a planning framework to adapt to sea level rise and protect vulnerable infrastructure through a long-term plan.  Plan or….

Sea Level Rise Planning – Part 1

June 22, 2014
Climate, communciations, Education, finance, Flooding, infrastructure, Insurance, JObs, Leadership, local government, planning, Water Funding, water sewer management
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The rainy season has sort-of started in south Florida and with it comes flooding and discussions of the falls end of season and concurrent high, high tides for the year, flooding and the impact of sea level rise on low-lying areas.  Much focus has been spent on the causes of sea level rise and the potential flooding caused by same.  However the flooding can be used as a surrogate to impacts to the social and economic base of the community.  By performing vulnerability assessments, coastal areas can begin planning for the impacts of climate change in order to safeguard their community’s social, cultural, environmental and economic resources. Policies need to focus on both mitigation and adaptation strategies, essentially, the causes and effects of climate change. Policy formulation should be based on sound science, realizing that policy decisions will be made and administered at the local level to better engage the community and formulate local decisions.

Making long-term decisions will be important.  Businesses look at long-term viability when making decisions about relocating enterprises.  The insurance industry, which has traditionally been focused on a one year vision of risk, is beginning to discuss long-term risks and not insuring property rebuild is risk-prone areas.  That will affect how bankers look at lending practices, which likely will decrease property values.  Hence it is in the community’s interests to develop a planning framework to adapt to sea level rise and protect vulnerable infrastructure through a long-term plan.

While uncertainties in the scale, timing and location of climate change impacts can make decision-making difficult, response strategies can be effective if planning is initiated early on. Because vulnerability can never be estimated with great accuracy due to uncertainty in the rate of warming, deglaciation and other factors, the conventional anticipation approach should be replaced or supplemented with one that recognizes the importance of building resiliency.  The objectives of the research were to develop a method for planning for sea level rise, and providing a means to prioritize improvements at the appropriate time.  In addition the goals were to provide guidance in developing a means to prioritize infrastructure to maximize benefit to the community by prioritizing economic and social impacts.

Adaptation planning must merge scientific understanding with political and intuitional capacity on an appropriate scale and horizon.  According to Mukheibir and Ziervogel (2007), there are 10 steps to consider when creating an adaptation strategy on the municipal level.  To summarize, these are as follows:

  1. Assess current climate trends and future projections for the region (defining the science).
  2. Undertake a preliminary vulnerability assessment of the community and communicate results through vulnerability maps (using GIS and other tools).
  3. Analyze vulnerability spatially, by overlaying development priorities with expected climate change on GIS maps to identify hotspots where adaptation activities should be focused.
  4. Survey current strategic plans and development priorities to reduce redundancy and understand institutional capacity.
  5. Develop an adaptation strategy that focuses on highly vulnerable areas. Make sure the strategy offers a range of adaptation actions that are appropriate to the local context.
  6. Prioritize adaptation actions using tools such as multi-criteria analysis (MCA), cost-benefit analysis (CBA) and/or social accounting matrices (SAM).
  7. Develop a document which covers the scope, design and budget of such actions (what they call a Municipal Adaptation Plan (MAP)).
  8. Engage stakeholders and decision-makers to build political support. Implement the interventions prioritized in the MAP.
  9. Monitor and evaluate the interventions on an ongoing basis.
  10. Regularly review and modify the plans at predefined intervals.

 

The strengths of this framework are the initial focus on location-specific science, the use of both economic and social evaluation criteria, and the notion that the plan is not a fixed document, but rather a process that evolves in harmony with a changing environment.  The final two steps occur at regular intervals by the community with associated adjustments made.  The next question is how to develop the data and priorities.