Our second year started exceptionally well when we learned last week that WaterNow Alliance was selected as one of three Finalists in the Imagine H2O California Water Policy Challenge. We are pleased and honored to be part of a great group of organizations that includes the Freshwater Trust, Greywater Action, the Alliance for Water Efficiency (AWE) and San Francisco Public Utilities Commission (SFPUC).

The concept behind the Water Policy Challenge was to “source policy ideas that accelerate the deployment of water technologies.” We recognized a kindred spirit in Imagine H2O around the notion that water innovation will thrive best when supported by synergistic public policy. In our view, one of the most important things we can do to accelerate adoption of innovative water technologies is to better empower public water providers – who represent the vast majority of water spending nationwide – to pay for them. This means giving water agencies more flexibility to invest in innovative approaches by using the same financing tools they so successfully deploy for conventional infrastructure – municipal bonds.

Much of the new water innovation “infrastructure” involves decentralized, consumer-side-of-the-meter options that have significant potential to increase water security and community resilience. These “distributed water systems” include efficient appliances, conservation measures, leak detection solutions, green infrastructure, behavior modifying software, low-water landscape technology, greywater reuse, storm water recapture, source water protection and more.

However, as our colleagues at Ceres concluded in a 2014 analysis:

“[I]f utilities intend to invest in distributed infrastructure on a scale even close to that on which they have historically invested in conventional infrastructure, they will have to reach out to the same source of financing: capital markets.”1

There are no legal barriers to capitalizing water innovation products or other distributed water systems. But very few public utilities do capitalize these assets, paying for them instead out of strained operating budgets. This substantially limits public investment in water innovation. Redeploying even a small percentage of public utility capital spending ($4 billion annually in California alone) to decentralized water innovation could provide a critical unlock.

We’ll be blogging over the next few weeks about the WaterNow Alliance’s flexible financing initiative and how we, Imagine H2O, and our growing network are working to provide public utilities with more financing options to support water innovation.

cynthia-blog-portrait

Cynthia Koehler is the Co-Founder and Executive Director of WaterNow Alliance.

Ceres, Bond Financing Distributed Water Systems:  How to Make Better Use of Our Most Liquid Market for Financing Water Infrastructure (August 2014) at 8 (hereinafter “Ceres 2014”).

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