Our nation’s water infrastructure is in serious need of replacement or at least according to a recent study by the American Water Works Association (AWWA). The details in the report are concerning and lead us to believe that an investment is required. Find out what the potential cost may be to the average American.
Key Findings in the Report
Nearly 1 million in underground water pipes will need to be replaced. In addition, new infrastructure will need to be built to satisfy growth (i.e. population growth and migration). The AWWA estimates that in total, it will cost $1 trillion over the next 25 years and $1.7 trillion through 2050.
From a geographic standpoint, about half the $1 trillion investment will be directed to the South Region ($507M), then the West ($236M), followed by the Midwest ($172M) and lastly the Northeast ($108M). Although there are some significant differences in the timing and magnitude of the challenges facing different geographies, a broad based replacement cycle of the water infrastructure is still needed.
The national investment required annually will gradually rise from $13 billion today to roughly $30 billion in the 2040s for replacement alone. This is because most of the water infrastructure that needs to be replaced was originally built in the late 1800s.
What is the cost to the average American?
There are several variables associated with the proposed plan but homeowners can expect their water bills to increase over the coming years. Those living in less densely populated areas and in the South can expect the largest increases or $550 annually for a three person household. Those living in urban areas will experience a more modest increase at $75 to $100 annually since the total cost can be spread over many households.
If you put things into perspective, the cost isn’t really that much. Most Americans pay as little as $3.75 for every 1,000 gallons of safe water delivered to their taps. That compares to $3,680 for every 1,000 gallons of gasoline ($3.68 per gallon).
How investors may benefit from this replacement cycle?
There will undoubtedly be government contracts up for grabs to help rebuild our country’s water infrastructure. Investors may want to explore potential companies that will be able capitalize on these long-term contracts.
For full details of the report, click here
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