7913

• UCREFRP Catalog Number: 7913
• Author: Freshwater Society.
• Title: Water Management in Transition, 1985.
• USFW Year: 1985.
• USFW - Doc Type: Navarre, MN.
• Copyright Material: YES

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Atemative Fmancing: Who Pays?

In addition to direct costs,
there are real but hidden
costs of not dealing with the
problem.

Increased federal deficits
have resulted in decreased
federal programs.

46

Joan M. Kovalic
Attorney
Taft, Stettinius & Hollister
Washington, D.C.

As increased federal deficits result in decreased federal water programs,
state dependence on direct financing will diminish. The resultingprocess
of achieving self-sufficiency in financing will lead to the exploration of
alternative funding mechanisms, new funding sources and innovative
publiclprivate sector partnerships.

The 1980s mark the development of a slow but steady awareness of a new type
of water problem. The issues of water quantity and quality are slowly merging
as the complex interrelationships among all uses of water are recognized, and
the realization grows that freshwater is a total resource and must be managed
as such, This realization is fundamental to the burgeoning awareness of today's
most difficult water problem: The nation as a whole is no longer able or willing
to directly subsidize water facilities.

Facing the Need for Maintenance and Rehabilitation

This problem derives from a series of important facts. Foremost is the hundreds
of billions of dollars in federal monies already spent to construct water-related
facilities, With this emphasis on construction, maintenance has been deferred,
and, as a result, much of this infrastructure is now in need of major rehabilitation
and repair. '

Estimates for new construction and repair range in the hundreds of billions of
dollars: $120 billion for wastewater treatment; $200 billion for water treatment;
$500 billion for municipal, industrial and agricultural water supply, flood control,
hydroelectric power, and other related water projects, While there are no
comprehensive hard data, these estimates are indicative of the relative magnitude
of the problem.

Also, maintenance and construction of water facilities are integral to the
economic health and growth of this nation and its communities. Thus, in addition
to direct costs identified above, there are real but hidden costs of not dealing
with the problem. These costs show up in productivity and growth declines,
system failures, expensive emergency repairs, general economic stagnation and
unemployment.

Fewer Federal Programs

In one sense, the final assessment of these needs is not relevant; since the
magnitude of the problem is so great, there will not be enough federal dollars
available in the foreseeable future to meet any significant portion of these needs.
In short, increased federal deficits have resulted in decreased federal programs.

It is helpful to put this into a real dollar-and-cents perspective. In the $1 trillion
current budget, the funds devoted to water resources are small - and even
that amount is shrinking.

Each dollar in the federal budget is roughly distributed as follows: 42 cents for
social programs and benefit payments, 29 cents for national defense, 11 cents
for grants to state and local governments, 13 cents for interest on the national
debt, and 5 cents for everything else.

Of that remaining nickel, one penny is allocated for natural resources and
environmental programs. Of that penny, only one-third of one cent is allocated
for water - and that amount is going down. By implication, then, if federal funds
are not forthcoming, the financial burden shifts to the states, localities and the
private sector,