Report Puts $1.4 Billion Estimate On Needs Of Wastewater Utilities In Hurricane Affected Areas

Wastewater utilities affected by last year's Hurricane Katrina are struggling to find an estimated $1.4 billion needed to repair and rebuild these systems, as well as to replace lost revenues due to a reduction in population, according to a report released on April 25.

Last year's Hurricane Katrina displaced hundreds of thousands of people and caused considerable damage to wastewater systems along the Gulf Coast. The report, "Assessment of Reconstruction Costs and Debt Management for Wastewater Utilities Affected by Hurricane Katrina," found that most of the damage to wastewater utilities was in surge zones.

The report, which focused on Louisiana, Mississippi, and Alabama, estimated that 445,000 people lost their homes due to a 15 to 25 foot storm surge that hit the three states. In addition to the devastating personal losses, displaced populations will result in reduced revenues for wastewater utilities in the surge zone. Although working to meet immediate needs, these utilities could face a prolonged period of insufficient funding to maintain essential public health infrastructure and meet long-term debt obligations.

Federal government and state agencies previously lacked comprehensive data on the condition of these systems as well as the utilities' financial position. Presented to Congress, EPA and the U.S. Department of Agriculture (USDA), the non-commissioned report was published by the Water Environment Federation (WEF), in collaboration with global engineering, consulting and construction company Black & Veatch, several municipal water agencies, and volunteers from among WEF's 36,000 members.

"The study originated from a general lack of attention paid to the wastewater industry in response to and recovery from a major disaster," said Jim Clark, vice president of Black & Veatch and a principal investigator for the study. "Although these services are critical for public health and the environment they are often overlooked. Our goal was to produce a high-level cost assessment that can be used as a basis for assessing the need for reconstruction funding and financial support."

Databases provided by EPA and states were used in the study and revealed that 118 wastewater utilities serving approximately 1.8 million people were affected by Hurricane Katrina. A sample group of 25 utilities was assessed for infrastructure damage -- field investigators visited 19 facilities and telephone surveyors polled an additional six utilities. Results were categorized by damage zone-surge, flood, or winds greater than 100 miles per hour-and treatment plant type and used to develop average costs, which were applied to each of the 118 utilities based on damage zone location.

The final report found that the total cost assessment to repair and rebuild wastewater collection and treatment plant infrastructure was about $1.2 billion. In addition, an estimated $163 million will be needed by the wastewater utilities to maintain financial solvency and critical infrastructure because of the impact on revenue of the reduced population in their service areas. The study authors used average per-person revenue and expense data to estimate the financial effect on the utilities.

Faced with these issues, the report estimates a total of about $1.4 billion is required to address the needs of impacted wastewater utilities. Also included are recommendations for federal and state agencies to consider in responding to the immediate and long-term financial needs of these utilities. "This report makes several recommendations for actions that should be undertaken by government and nongovernmental organizations, including the private financial sector, to help publicly owned treatment works recover and serve their communities in the future," said Ed McCormick, chairman of the Water Environment Federation's peer review committee. "Successfully rebuilding communities in Louisiana, Mississippi and Alabama depends on the availability of basic sanitation services provided by wastewater utilities. Investment in the Gulf Coast region's wastewater infrastructure must be a top priority."

Recommendations for federal, state and local governments, as well as local communities, wastewater utilities and the private financial sector include:

  • Monitor wastewater utilities' fiscal conditions and provide relief when necessary.
  • Provide guidance on federal funding sources and grant application processes.
  • Institute mutual aid compacts with neighboring states and develop best practices for emergency preparedness and response.
  • Rebuild only as necessary to meet revised population estimates.
  • Develop best practices for emergency.
  • Provide financial restructuring to help utilities avoid default.

"Water and wastewater utilities are the most capital intensive of all utilities," said Eileen O'Neill, WEF's chief technical officer. "Utilities in areas subject to long-term population reductions will likely need financial subsidies beyond currently available grants and loans if they are to maintain facilities essential to public health. The report's recommendations are intended to help federal and state agencies, as well as the wastewater profession, to not only meet today's challenges but to better prepare for incidents of this magnitude."

The complete report can be found at http://www.wef.org.

Last year, the American Water Works Association released a report finding that the costs to repair and replace public drinking water infrastructure damaged by Hurricane Katrina will surpass $2.25 billion. View related article, Katrina's Damage To Water Systems To Top $2.25 Billion, in the September 2005 archives of WWP Online; while on the main page, click on "Search archives for news and features!" under Daily News to access the archives.

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