Utilities Have a New Financing Option to Protect Drinking Water Sources

Written by: Martha Sheils. Sheils is the Director of the New England Environmental Finance Center. Martha passionately believes that land conservation around drinking water sources is the first and most important step toward ensuring safe drinking water supplies and a better quality of life.

The principal mission of public water systems is to supply clean, safe drinking water to the public. Several very good economic studies exist that demonstrate that protection of the land surrounding drinking water sources is the most economical and most effective way to ensure safe drinking water. The New England EFC has done work with Maine utilities that collaborate with land trusts to reach their common goal to protect high water quality and save millions of dollars in water treatment costs. A much referred to case study is that of the $1 billion commitment by New York City to protect its source waters in the Catskill Mountains, adding to the already substantial investment of $1.7 billion that NYC has spent since the 1990’s to avoid building a much more expensive filtration plant. “The city’s water system could well be its single most important capital asset — or at least on par with the subway system,” said Eric A. Goldstein, a senior lawyer for the Natural Resources Defense Council.

In addition to the economic benefits of protecting nature’s water filtration systems, there are numerous co-benefits associated with permanently protected lands including climate change mitigation and adaptation, biodiversity conservation, contributions to human health and well-being, recreation, higher property values and more.

So why then do water utilities spend 19 times more on water treatment chemicals every year than the federal government invests in protecting lakes and rivers from pollution in the first place using techniques such as conservation of forest land?  Each year we lose an additional 24,000 acres of forest in New England alone, jeopardizing the benefits provided by open space and undeveloped lands.

A new player in town: The 2018 Farm Bill

There is no single funding source for implementing source water protection activities. Two significant sources of potential funding from EPA programs are the Drinking Water State Revolving Fund (DWSRF) and the Clean Water State Revolving Fund (CWSRF).

But the level of funding from federal, state, and local entities for source water protection have been fairly low, mostly for planning and land acquisition, and they sometimes come with matching requirements. That formula has recently changed and utilities now have all the incentive they need to engage in robust source water protection programs under the 2018 Farm Bill.

Farm Bill support for drinking water source protection started in 2014 with the establishment of the Regional Conservation Partnership Program (RCPP) to provide financial and technical assistance for voluntary conservation projects that protect source water and other natural resources. The RCPP promotes coordination of USDA’s Natural Resources Conservation Service (NRCS) program.  RCPP authorized partnerships among agricultural producers, the U.S. Department of Agriculture (USDA) and non-agricultural entities such as water utilities.

Back in 2014, NRCS approved three projects that American Water Works Association (AWWA) collaborated on:

  • The Milford Lake Watershed in Kansas: To reduce 31,000 pounds of phosphorus per year and reduce the duration of harmful algal blooms on Milford Lake.
  • Mills River Source Water Protection, North Carolina: To restore streambanks, reduce sediment and nutrients and create a safe system for mixing agrichemicals
  • Otter Lake Source Water Protection, Illinois: To reduce sediment and nutrient loading and the occurrence of cyanobacterial blooms.

The Farm Bill of 2018 significantly increased the financial incentive and technical assistance to utilities. It mandates that 10 percent of funds authorized for conservation programs must be used to protect sources of drinking water. It also increases incentives for agricultural producers to implement practices that benefit source water protection and authorizes community water systems to work with state technical committees for agricultural programs to identify local priorities for source water protection.

“This is truly a historic time for source water protection,” said AWWA Chief Executive Officer David LaFrance. “Conservation efforts partnered between the USDA, water utilities and the agricultural industry are extremely important to everyone who depends on clean drinking water.”

The $867 billion Farm Bill includes $4 billion dollars for conservation practices that protect sources of drinking water over the next ten years. AWWA was pivotal for helping to get these provisions included as follows:

  • An emphasis on source water protection through all Farm Bill conservation programs;
  • 10% of NRCS conservation funding directed toward source water protection, an incredible total of $4 billion over the next 10 years;
  • Authorization for water utilities to work with State technical committees in identifying priority areas in each state; and
  • Additional incentives for farmers who employ practices that benefit source waters.

NRCS has about 11,000 employees decentralized across the country and represented in each state with a state office, areas offices, and multiple field offices. The agency’s engineers, agronomists, biologists, soil scientists and other scientific experts provide direct technical and financial assistance to farmers, ranchers and forest land owners.

More information is available in AWWA’s publications, “Working with the NRCS for Source Water Protection” and “USDA Tools to Support Source Water Protection.” Both are located on the Source Water Protection Resource page on AWWA’s website.

Watersheds as Water Infrastructure

In 2016, California’s Governor Brown’s approved bill AB2480, which allowed the inclusion of source watersheds within its water infrastructure management and funding scheme. The bill states “It is hereby declared to be the established policy of the state that source watersheds are recognized and defined as integral components of California’s water infrastructure”.

With the passage of AB2480, natural watershed resources such as streams, meadows and forests now join canals, dams and levees as water resources that can receive funding from infrastructure bonds. These natural resources play a major role in water retention, transport, and quality, and are now being recognized as integral water resources and eligible for financing previously available only to man-made structures.

There has never been a better time for drinking water utilities to advance their effort to protect forever the natural infrastructure in their watersheds. Protecting lands around drinking water sources can save millions of dollars that would otherwise be spent on building and maintaining water filtration plants and the never ending needed chemicals to ensure safe drinking water, not to mention the many co-benefits that come with a healthy and robust watershed.

For more information about source water protection see the New England Environmental Finance Center website https://neefc.org/tools-resources/