Water Could Become Unaffordable for a Third of American Households
Some 40 million U.S. households could lose access to drinking water if the government doesn't repair failing infrastructure and encourage decreased water consumption.
Many Americans take water for granted. Throughout most of the country it's readily accessible from the faucet, from a drinking fountain in the park, or in a bottle at the store.
Currently, the average household water bill in America is $120 for 12,000 gallons per month. Michigan State University researchers project that number will rise $49 by 2022.
The cost of water has already been steadily rising in most of the country. Between 2010 and 2015, 30 major U.S. cities saw their water bill jump by 41 percent. In Detroit, 50,000 people have lost water access since 2014. In Philadelphia, 40 percent of water bills are overdue.
If water prices continue to rise at the same rate they have for the past five years, 40 million American households will likely lose access to water.
Michigan State University researchers looked at water utility reports, as well as surveys from the American Water Works Association across the U.S. and found that when water prices rise above 4.5 percent of a household's income, they are forced to reallocate funds from elsewhere to their water bill.
To stay below that benchmark a household must earn a minimum of $32,000 a year, which is challenging for many Americans, considering 51 percent of the population makes less than $30,000 a year.
"Infrastructure is the main contributor to water price surges," Elizabeth Mack, a geography professor at MSU and the lead study author, told Seeker.
While Flint, Mich., is the most notable example of failing water infrastructure, other U.S. cities could soon face a similar problem.
Washington, D.C. has a water system of that dates back to the Civil War, while other cities still use wooden pipes that haven't been updated since the mid-1800s.
Lack of precipitation is also a major concern. Recent heavy rainfall in California, has temporarily relieved the drought in nearly half the state, but Gov. Jerry Brown's drought emergency declaration remains in effect.
According to Mack, while failing infrastructure currently poses the biggest threat to water price surges, but without learning to save and reuse water, scarcity will contribute to higher prices in the future as well.
"Right now water is not priced as a scarce resource," Mack told Seeker. "Pricing for scarcity has not yet entered the conversation on a broad scale unfortunately, nor have widespread efforts to help households adopt water saving fixtures and appliances."
But pricing water as a scarcity is on the minds of some including Dr. Michael Burry. Burry is among the four investors who predicted, and therefore profited from, the U.S. housing crisis depicted in the 2015 movie The Big Short.
Burry must have a knack for capitalizing on crisis because he now focuses all of his investments on water. Since water is not a tradable commodity this might seem odd, but according to Vintage Value Living, there are several ways to invest in water.
Due to the factors mentioned in Mack's study - such as aging infrastructure and water scarcity - there's a growing demand for available freshwater, both in the U.S. and globally. And where there's demand there's opportunity for profit.
Investing in the future of water can be done in a number of ways. Investors purchase water rights for later sale or rent the water source to others. Water-rich agricultural land is purchased for raising crops and is then sold to countries with water scarcity. Others invest in water utility companies, in areas that are likely to privatize their water systems.
But privatization of water utilities is a controversial issue. James Olson, an environmental, water and public interest lawyer who founded the organization For Love of Water, which seeks to protect the Great Lakes, has been focusing on water privatization for years.
"The financial principal for municipal water service is non-profit, it's cost-based," Olson told Seeker. "[But] if a private company takes over and they charge the same rates, how are they going to make a profit? The profit has to come from somewhere."
Olson warns that privatized water utilities would hit low-income households hardest because private companies generally don't offer affordability plans. Every household would be expected to pay the same rate.
Referring to the estimated cost of fixing the entire country's outdated water infrastructure Olson said, "If it's a trillion dollars added to the current cost of struggling municipal water systems it's gonna hit the pocketbook of the poor."
This is in line with what Mack and her team found when they looked at areas that are at a high risk of water-price surges. States in the southern U.S. are currently most susceptible, with Mississippi, Louisiana and Alabama topping the list.
To maintain access to water, according to Mack, they must find a way to improve their infrastructure without passing on the cost to consumers.
"National affordability guidelines need to be established as well as protections that prevent water shutoffs for vulnerable populations - children, the elderly, disabled and pregnant women," Mack said. "Some states have protections for customers so they will not have services terminated due to delinquent payments, [but] this is not something in place across all states."
Olson agrees that our government needs to ensure public access to water. "Isn't water a human right? It's the federal government's responsibility to assist the states to deliver on this fundamental, constitutional question of access to water," he told Seeker.
"It's the relationship of people to government and water to people that you have to think about here," Olson added. "[Water] is not, by its nature, a private enterprise. Some things are fundamentally public - and water is one of them."
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