Climate change has been labeled by President Biden, other elected leaders and environmental groups as an existential threat, with critical human infrastructure under siege from more frequent and intense weather-related storms, flooding, droughts and wildfires. The Environmental Protection Agency (EPA) warns that water infrastructure may be vulnerable to sea level rise, saltwater intrusion and greater pollutant runoff, eroding confidence in system resilience at a time when asset hardening should be top of mind.
Black & Veatch’s 2022 Water Report survey of more than 300 stakeholders across the water, wastewater and stormwater industry illustrated that utilities are adopting a variety of strategies as they work to reposition themselves as more adaptable and resilient to climate change. That’s even as they wrestle with how to plan for and secure funding, educate ratepayers and garner support in the face of a confoundingly unknown future.
A Seismic Shift
The water industry is making a substantial shift toward sorting out climate vulnerability and risks in concert with integrating such variables within their capital program, asset planning and operations. Across the industry, Black & Veatch has noted increased interest from water, wastewater and stormwater utilities when it comes to planning for climate change adaptation and mitigation, setting and meeting environmental, social and governance (ESG) goals, developing metrics and measuring sustainability and resilience.
When polled on what utilities see as their primary climate mitigation/adaptation strategies, most respondents pointed to water loss mitigation and water conservation, followed by strategies to improve energy efficiency and promote electrification and renewable energy.
The higher positioning of energy-efficient strategies, conversion of fleet vehicles to electric vehicles (EVs) and implementation of onsite renewable energy generation also reflect an industry focused on enhancing energy management efficiency. While some utilities in the past decade had started integrating energy management into their proactive planning, the war in Ukraine unfolding at the time of this report is further highlighting the need for energy resilience. The resulting sanctions against Russian gas and oil are throwing the global energy market into disarray, sending costs skyrocketing and spurring discussions about energy resilience and independence.
However, green stormwater infrastructure ranked fifth in the survey, which was surprising, given its importance in managing combined sewer overflows (CSOs), sanitary sewer overflows (SSOs) and flooding — all of which are impacted by climate change. Given that the majority of survey replies came from water and wastewater utilities (stormwater utilities comprised only 23 percent of respondents), it’s likely that the results skewed toward water conservation — a big focus of drinking water utilities and energy-efficient, net-zero strategies (driven more by wastewater utilities).
Building climate change resilience and adaptation mechanisms also requires funding capacity. To date, water, wastewater and stormwater infrastructure has been notoriously underfunded in the United States. But federal funding through the American Rescue Plan Act of 2021 (ARPA) and the trillion-dollar Infrastructure Investment and Jobs Act (IIJA) now are offering utilities an unprecedented opportunity to plan and invest in aging infrastructure, address compliance mandates and enhance resilience driven assets and initiatives.
According to the survey, a combined 78 percent of respondents said they were “extremely likely” or “fairly likely” to pursue funding from these new mechanisms, tapping into resilience money through the new Building Resilient Infrastructure and Communities (BRIC) programs, pre-hazard mitigation funds and other multi-sector opportunities to drive greater climate resilience across their entire enterprise.
In a separate question, more than half — 51.3 percent — of respondents said they were “extremely” or “very” confident that they have the ability to use the funding, with an additional one-third expressing only moderate confidence. The relatively lower confidence could be due to various concerns, including competitive process to obtain funding, matching fund requirements, administrative reporting and other compliance requirements.
To leverage the federal, state and local funding opportunities, utilities should improve their internal funding resilience by investing in multi-year financial planning and financial best practices. They also should consider diversifying their funding streams so that utilities are not dependent upon one method of funding such as funding stormwater management through tax revenues but consider other more dedicated and stable sources of revenues such as stormwater user rates and charges, impact fees and other innovative monetization of services. By planning ahead and building out their internal funding resilience, utilities will be better equipped to leverage all the funding opportunities available to them.
Planning for a Climate Future
For utilities to truly plan for climate adaptation, they must remember it’s not only about investing in protecting assets but also optimizing operations and maintenance and enhancing the level of services, including effective management of green infrastructure.
Although respondents are focusing on water loss mitigation and conservation strategies, it is important to distinguish between the two types of mitigation. The first type, “real losses,” are associated with the water infrastructure itself in the form of leaks, main breaks or other such losses resulting from physical infrastructure.
But the second type, “apparent loss,” also plays a critical part and results from how a utility operates its billing, metering, pressure management and customer conservation programs, all of which fall under operations and planning. This also is true for energy-efficiency strategies; it’s not only the infrastructure and technology that the utility places in service but also the type of operational protocols and policies that govern utility-wide energy management. This even extends to fleet operations in how water utilities operate their fleets, plan their routing, etc.
Climate adaptation will require planning, funding and the adoption of multiple yet integrated strategies to help ensure a more resilient future against climate-related extreme events. Continuous and consistent proactive planning and building the necessary technical, financial, infrastructural and organizational capacity can help utilities move forward on the continuum of climate adaptation and resilience.