A gallon of tap water in New Jersey usually costs well less than a penny, roughly $400 a year per household. People may see that price as either cheap or expensive. Either way, it is a price New Jersey can’t afford.
Water utilities face the same general rules whether owned by government or the private sector. They must provide sufficient water to their customers to meet normal and peak demands, and that water must meet drinking-water quality standards.
The problem is too that few water utilities keep up with the costs of repairing and replacing their assets, as discussed in three recent reports my research teams prepared for New Jersey Future. Water utility managers acknowledged this issue in nearly every interview. The NJ Clean Water Council (which advises the NJ Department of Environmental Protection), the American Society for Civil Engineers, and Facing the Future (funded by New Jersey philanthropic foundations) have raised similar concerns.
The problem results primarily from aging water pipelines. Many urban areas have pipelines that are over 100 years old, including some built in the 1800s. Even where those pipelines were built of very strong materials, they are now falling apart. Suburban pipelines built from 1950 to 1970 — what we could call the “boomer pipelines” — used less robust materials and are also aging out. We face two-to-three decades of pipeline replacement needs that greatly exceed recent efforts.
State regulations aren’t clear enough regarding maintenance and replacement of the many thousands of miles of pipelines bringing water from the source to the customers. If a pipeline breaks, the water utility certainly must fix it, and quickly. Unfortunately, all too often breaks are addressed as isolated issues. Water utilities may budget for these expensive emergency repairs, but too few budget enough to ensure that pipeline breaks don’t occur in the first place.
Professionals in the water field — from utilities to NJDEP to the U.S. Environmental Protection Agency — are well aware of these problems. We have a rough sense of the costs. The American Water Works Association estimated the need for $1 trillion (yes, that is a “t” as in $1,000 billion) in capital costs to restore our nation’s aging water utilities. Based on New Jersey’s share of the national population, our costs would be $28 billion (over $3,000 per person), but our systems are actually older than the national average and so our costs could be significantly higher.
Why have we let the situation get so bad? Some common reasons include:
These reasons all contribute to water prices that are lower than they should be. And don’t look to the federal or state government for free money. Those days are long gone, though some low-cost financing help is available. Most costs will be borne by the customers regardless of utility ownership.
We need our political leadership to recognize these major risks, support much better assessments of system problems, ensure that water prices are adequate to address those needs, and help those households who truly face affordability issues. Otherwise, our water utilities will not be able to support a strong economy, sound environment, and quality communities. The longer we wait, the worse our problems and costs will be. Unfortunately, the future is here, and we aren’t doing enough.