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LOCAL REVENUES BLEAK? Part 1

August 27, 2013
economy, finance, funding, infrastructure, Leadership, management, Revenues, sustainability, Uncategorized, Water Funding
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A new GAO report suggests that the short and long-term future for state and local revenues may be more difficult that currently anticipated, despite the economy recovering in many places.  For most of the 1990s and the mid 2000s, many states and local governments operated with surpluses, or could have.  Many elected officials, like those in Florida (or Congress in 2001), chose to reduce tax rates to balance the budget as opposed to restocking reserve funds.  When property values plummented and tourism and consumer buying diminished, the taxes related to all three plummented as well.  None have yet returned to their pre-2008 levels.  In fact, the property values lag so badly, it may be 10-20 years in many jurisdictions before they return to their former selves.  In South Florida’s suddenly “hot” real estate market, local officials are raving about the 28% increase in property values in 2012/2013.  Sounds great until you realize that they need to increase 100% to return to pre-2008 levels.  Even in a hot market it may be over 5 years to recover.  So property values are not a short-term problem.  Some communities may never recover.  So much for saving for that rainy day.

It should be plain to all of us that the failure of those in power to stockpile reserves caused many governments to spend down what limited reserves they had in the past 5 years as a means to avoid the hard and unpopular decision – raising taxes to collect the same revenues as before the mid-2000s cuts.  Now the lack of reserves creates an issue going forward – as costs increase faster than revenues, there are no reserves to tap into.  It is a problem that just keeps on giving.  The failure to address the root cause – the failure to set revenues collections at an appropriate level and accumulate surpluses when you are lucky enough to get them.  Unfortunately the political discussion keeps going back to keeping costs down, but cuts in costs means cuts in services.  Sounds great to cut the Plantation trolley because of budget needs, but what about those citizens that rely on the trolley?  Or the businesses it serves.  Cutting Meals on Wheels which primarily serves shut-ins is a great idea in Broward County with a hue population of elderly that find it difficult to get out of the condo?  And does it really make much impact on the overall budget?  Not really.  There are cosmetic issues.  There a more symptomatic issue here?

GAO points to health care as a cost increasing faster than the rate of increase in revenues, but the latest data seems to indicate that the rate of growth may be less than projected by those opposed to the new Health Care laws.  Underfunded pensions are also a potential area of concern, but cutting employees is not the solution for that as outlined in a prior blog.  Cutting employees cuts the funding for pensions which guarantees future problems.  So that idea actually works against the goal of shoring up the problem.  So, no that is not the answer.  We are clearly paying for the sins of 15 years ago when we were awash with funds, but decided to cut or public “income.”  Who does that anyway?!?!

I never like Chicken Little, because he never had a solution for the problem.  Part 2 will outline some thoughts…

SURVEYS TO FIND, WHAT YOU WANT TO FIND….

July 31, 2013
Congress, Leadership, politics, Uncategorized
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Jim DeMint is a smart guy.  He parlayed a short stint as a Tea-Party Senator from South Carolina into a million dollar a year executive position with a conservative think tank.  Then he sends out surveys to figure out where the “public” stands on certain issues.  For example: 

Because of uncontrolled spending, the federal government ran a $4 trillion budget deficit for 232012 and our national debt is not a staggering #16 billion.  Do you want Congress to take serious action to rein in out-of-control spending?  Yes or no. 

Ok, first the deficit was not $4 trillion in 2012.  So that’s a lie.  But what are the other options?  Reining in spending is not the only option, but it is the only one given.  Certainly the question is most likely to get a “yes” answer which is exactly what DeMint’s organization is looking for. 

Let’s look at another one.  

How would you consider yourself politically:  Very conservative, somewhat conservative, Independent, but lean conservative, independent, but lean liberal, somewhat liberal and very liberal.  

Clearly a “you are either with us or against us” question, but one that tells you everything you need to know about Congress and politics in general.  You can’t be in the middle.  You can’t draw the best ideas from both sides of the aisle.  Precisely the problem gripping Washington and many State capitols.  No one can compromise, so we get sequestered.  This type of polarization does not help America move forward nor does it help use solve problems. It increases the burden on local governments to address the problems that the failure to compromise at higher levels allow to persist, or may even create.

SEQUESTRATION HITS US ALL

July 23, 2013
Congress, infrastructure, Monitoring Water, planning, Sequestration, sustainability, USEPA, USGS, Water Funding, water sewer management, water supplies
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Sequestration is the word we are all using to explain the failure of the Congress to put together a budget with appropriate revenues and expenditures.  Congress can’t figure out how to reach a budget agreement, so the federal government set itself up for mandatory cuts in services. I had a recent grant sequestered, then cancelled.  It really could have helped a local community with long-term water supply and quality problems identify adaptation and mitigation strategies fo rites future.  Minor money for Washington, but a big deal down here.  Likewise I have spent the last 6 months on a subcommittee for USGS that is focusing on what could be cut from USGS.  That means less testing water quality, water levels in groundwater, stream gauges and less evaluation of results.  Most of the water issues USGS looks at crosses local and even state lines.  Since we all rely on water, this is at national concern.  Precisely when we need the information most, we may be getting less.  Expect to start seeing more sequestration issues. 

 

 

The problem is that the biggest expenses, social security and debt, cannot be cut without major backlash in the financial and voter markets.  So the cuts come from the smaller accounts – things like the federal share of state revolving funds, water research and water/wastewater programs.  The community and tribal assistance account was slashed $210 million while the environmental program budget was cut $135 million. While some may be cheering EPA cutbacks, the reality for water and wastewater users is less federal assistance to our industry.  That means more of the onus is on us, and on our customers.  The  unintended consequences of the failure of Congress to act….

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.

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.

Groundwater Accelerates Sea Level Rise

March 14, 2013
Climate, communciations, Development loans, Environment, funding, groundwater, infrastructure, Insurance, Leadership, management, planning, sea level rise, stormwater, sustainability, Tidal flooding, Uncategorized
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Regardless of the causes, southeast Florida, with a population of 5.6 million (one-third of the State’s population), is among the most vulnerable areas in the world for climate change due its coastal proximity and low elevation (OECD, 2008; Murley et al. 2008), so assessing sea level rise (SLR) scenarios is needed to accurately project vulnerable infrastructure (Heimlich and Bloetscher, 2011). We know that sea level has been rising for over 100 years in Florida (Bloetscher, 2010, 2011; IPCC, 2007). Various studies (Bindoff et al., 2007; Domingues et al., 2008; Edwards, 2007; Gregory, 2008; Vermeer and Rahmstorf, 2009; Jevrejeva, Moore and Grinsted, 2010; Heimlich, et al. 2009) indicate large uncertainty in projections of sea level rise by 2100. Gregory et al. (2012) note the last two decades, the global rate of SLR has been larger than the 20th-century time-mean, and Church et al. (2011) suggested further that the cause was increased rates of thermal expansion, glacier mass loss, and ice discharge from both ice-sheets. Gregory et al. (2012) suggested that there may also be increasing contributions to global SLR from the effects of groundwater depletion, reservoir impoundment and loss of storage capacity in surface waters due to siltation. The loss of groundwater, mainly from confined aquifers, is troubling, and currently completely unknown. The contribution of carbon dioxide, commonly occurring in deep groundwater is also unknown. To gauge the risk to property in southeast Florida, Southeast Florida Regional Climate Compact and Florida Atlantic University reviewed twelve different projections of SLR and its timing. The consensus was 3” to 7” by 2030 and 9” to 24” by 2060. From the literature review and analysis, it was concluded that approximately 3 ft. of sea level rise by 2100 would a suitable scenario and time frame to illustrate the methodology presented in this article. 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 was considered for risk scenarios. An issue normally ignored in sea level rise projections is groundwater. The importance of the groundwater table in the model is that it is responsible for determining the soil storage capacity. Soil is composed of solids, water, and air (voids). Soil storage capacity depends on physical and chemical properties, water content of the soil, and depth to the water table or confining unit (Gregory et al 1999). As the rain infiltrates the soil, unsaturated pores quickly fill up, effectively raising the water table (Gregory et al 1999). For example efforts, a groundwater surface elevation map was derived based well site information available from the USGS (http://groundwaterwatch.usgs.gov) that had a minimum of 35 years of continuous data. Using GIS, an inundation model was created in GIS by subtracting the groundwater surface model from the digital elevation model with the difference in elevation being the soil storage capacity. The photo shows the evolution of these features as applied to a section of northwestern Miami-Dade County. What this indicates it that the impact of sea level rise on low-lying inland areas may be far different that the projections using the bathtub models. It also means that wellfields, sewer mains, roadways and storm water systems will be affected far more quickly than projected from bathtub models. The method used here suggested that the estimated may be off by a factor of two of three.

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….