Investing in Rural Sewage Infrastructure for Economic Growth

Sewage Plant Wastewater Sewage Treatment Plant

In a country where state capacity to provide basic services is not at question, it is surprising to learn that households in the United States still lack access to wastewater treatment systems. Between 40% and 90%of households in rural Lowndes County, Alabama, for example, either have poor or no access to sanitation infrastructure. Central Appalachia and indigenous communities also suffer from the same fate, and the issue has attracted the attention of the United Nations Independent Expert on the Human Right to Water and Sanitation.[1]

President Donald Trump has repeatedly promised to invest in infrastructure, but his Administration’s proposed budget, which was released in May 2017, has proposed a drastic reduction in federal spending on rural infrastructure. If the Trump Administration wants to “Make America Great Again,” then it needs to invest in rural wastewater infrastructure because it helps grow the economy through job creation stimulating private sector investment, and increasing a community’s tax base.

Water and Sanitation Infrastructure Availability in the United States

Between 1950 and 2000, the United States made great strides in increasing access to wastewater infrastructure, particularly in rural areas. In 1950, the percent of occupied housing units without access to complete plumbing stood at 27%; by 2000 it had decreased to 0.64%.[2] There is a rural-urban divide; however, both areas have made great progress, with lack of access in urban areas decreasing to 0.5% in 2000 from 11% in 1950, and lack of access in rural areas decreasing to 1% in 2000 compared with 56% in 1950. Within rural areas there are further disparities: the lack of complete plumbing in occupied housing units is higher in rural communities with less than 1,000 individuals (1.27%) compared with 0.61% in rural communities of at least 2,500 individuals.

How Wastewater Infrastructure is Funded in the United States

Private individuals and municipalities provided wastewater infrastructure in the United States during the 19th century. With the New Deal in the 1930s, the federal government’s involvement in wastewater infrastructure increased, as it was tasked with building water and wastewater networks to decrease unemployment and meet public demand.[3] This effort increased access to wastewater infrastructure by 73%, with small communities benefitting most and receiving approximately 75% of federal funds.

Prior to the Clean Water Act (CWA), the Water Pollution Control Act was passed in 1948 with the goal of limiting pollution in US rivers; it made $22.5 million per year available in federal loans for building wastewater treatment plants.[4] In 1966, Congress passed the Clean Water Restoration Act, which increased federal funding for wastewater treatment to improve water quality to $3.4 billion, still not enough to close funding gaps for wastewater treatment facilities at the time.

“As a result, federal funding for wastewater infrastructure decreased by almost 50% over six years.”

To address citizens’ concerns about public health, Congress passed the Federal Water Pollution Control Act in 1972 (later renamed the Clean Water Act). The CWA made grants available for constructing publicly-owned wastewater treatment facilities. From 1973 through 1975, Congress authorized $18 billion in construction grants and increased that amount to $24.5 billion by the end of 1981.[5]

However, once Ronald Reagan assumed the presidency in 1981, state and local governments took responsibility for funding wastewater infrastructure. As a result, federal funding for wastewater infrastructure decreased by almost 50% over six years.[6] In 1987, Congress enacted the Water Quality Act, which further decreased federal funding for wastewater infrastructure, and by 1994, only $600 million were available in federal grants for building wastewater treatment facilities.

In 1995, the Clean Water State Revolving Fund (CWSRF) substituted for federal construction grants, although it had been in operation since 1988. More recently, the recession between 2007 and 2009 created renewed interest from the federal government in funding wastewater infrastructure as a way to kick-start the economy and create jobs. The American Recovery and Reinvestment Act of 2009 (ARRA) has made $4 billion available for the CWSRF and $1.38 billion specifically for rural water programs.[7]

USDA’s Role in Funding Rural Wastewater Infrastructure

The United States Department of Agriculture (USDA) makes loans and grants available for building and improving water and wastewater infrastructure in rural areas in the United States. Seventy percent of available funds are made available through loans and the remaining 30% are available as grants.[8] Forty-three percent of those loans and grants are made for wastewater treatment, while the rest of the funds are committed to drinking water initiatives.[9] Over the past fifteen years at least 7,500 rural water and wastewater systems, serving 6.5 million people, have benefitted from $10 billion in funding from USDA.[10]

The Trump Administration’s proposed budget seeks to significantly reduce funding for programs that provide financing mechanisms for rural wastewater infrastructure, such as the Rural Utilities Service and the Rural Housing Service. These measures, however, contradict the Administration’s goal of creating an American resurgence, as they negatively impact the economy.

Reasons to Invest in Rural Wastewater Infrastructure

Building water and wastewater infrastructure in rural and urban communities across the US creates jobs, stimulates investment from the private sector, and increases a community’s tax base.[11] For each dollar spent building water or wastewater infrastructure, about $15 are created in private investment and  “$14 [added] to the local property tax base.”[12]

“Communities, therefore, either remain in the same position (at best) or their circumstances worsen…”

Supplying rural areas with wastewater infrastructure has the potential to increase economic activity in a number of ways, including reducing out-migration of rural residents, increasing agricultural output, and attracting industry to generate jobs, which would attract residents.[13] Out-migration, which could partly be driven by a lack of wastewater services, further exacerbates the problem of a lack of wastewater infrastructure because it decreases the tax base on which a municipality can draw to provide such services. This creates a paradox for rural communities where residents leave because infrastructure is lacking, in turn decreasing the revenue that a municipality or community has to improve infrastructure. Communities, therefore, either remain in the same position (at best) or their circumstances worsen because they cannot generate enough revenue to maintain their wastewater infrastructure. Rural communities are thus trapped in a Catch-22.

Second, employers and manufacturers that locate their businesses in urban areas may be encouraged to expand their operations into rural areas if they have the wastewater infrastructure that they need. This expansion/relocation may bring employment to rural areas, which are experiencing an unemployment rate of 5.7%[14], a rate that is higher than the national average (5.2%) and higher than the average rate of unemployment in urban areas (5.2%).[15] It is important to note, however, that while rural unemployment rates have been decreasing, the decrease is not a function of more people looking for work; instead it is a product of fewer people seeking jobs.[16]

If the Trump Administration truly has the interests of rural America at heart, a demographic from whom the Administration has drawn significant support, then investing in the infrastructure it needs to grow its economy is essential.

Farah F. Hegazi is a Ph.D. candidate in environmental politics and policy at Duke. She seeks to understand, explain, and address the challenges that governments in the Middle East face in delivering water and sanitation services to unserved and underserved areas.

Special thanks to Erika Weinthal for her comments on earlier drafts of this article.

[1] United Nations. 2011. Report of the Special Rapporteur on the Human Right to

Safe Drinking Water and Sanitation: Mission to the United States of America. Available at http://www2.ohchr.org/english/bodies/hrcouncil/docs/18session/A-HRC-18-33-Add4_en.pdf.

[2] Rural Community Assistance Partnership (RCAP). 2004. Still Living Without the Basics

in the 21st Century: Analyzing the Availability of Water and Sanitation Services in the United States. Available at http://www.winwater.org/reports/RCAP_full_final.pdf.

[3] Solomon, L. D. 2011. America’s Water and Wastewater Crisis: The Role of Private

Enterprise. Piscataway, NJ: Transaction Publishers.

[4] Solomon 2011

[5] Solomon 2011

[6] Solomon 2011

[7] Solomon 2011

[8] Copeland, C. 2014. Rural Water Supply and Sewer Systems: Background Information.

Available at http://nationalaglawcenter.org/wp-content/uploads/assets/crs/98-64.pdf.

[9] Copeland 2014

[10] Copeland 2014

[11] Bagi, F. S. 2002. “Economic Impact of Water/Sewer Facilities on Rural and urban

Communities.” Rural America 17: 44-49.

[12] Bagi 2002

[13] Warner, D. and J. S. Dajani. 1975. Water and Sewer Development in Rural America: A

Study of Community Impacts. Lexington, MA: Lexington Books.

[14] United States Department of Agriculture (USDA). 2016. Rural America At A Glance. Available at https://www.ers.usda.gov/webdocs/publications/80894/eib-162.pdf?v=42684.

[15] USDA 2016

[16] USDA 2016