Funding our Future: The Importance of Investing in Sustainable Development
As an industry, we have made tremendous strides in safeguarding the world's water sources. Going forward in an environment characterized by restricted federal budgets will require the water industry to rethink how we foster and incentivize innovation.
By Mark Turpin
Each day that I come to work in our Fort Lauderdale, Fla., office, I am greeted with a National Geographic quote: "All the water that will ever be is, right now." The quote is stenciled on a wall near my office and serves as a regular reminder of the responsibility that everyone in our industry shoulders for sustaining one of nature's most precious resources.
A World Commission on Environment and Development report entitled Our Common Future defines sustainable development as "development that meets the needs of the present without compromising the ability of future generations to meet their own needs." Over the past five years, we have heard much from the current U.S. administration about the importance of sustainability. Most of this national discourse has been focused on the need for sustainable development of "green" and "renewable" sources of power like wind and solar.
The administration's focus on green energy has been accompanied by tangible investments in both research and development and commercial development for these technologies. At the same time, millions of dollars of private investment is being focused on technologies like hydraulic fracturing for extracting oil and gas. This combination of public and private investments is revolutionizing the global energy market in ways impossible to predict just a few years ago. The changing energy landscape has even led to credible predictions that the U.S. could be energy independent by the year 2020.
Many of us tasked with protecting the nation's water sources are asking, "Why are we not also seeing increased investment for sustainable development in the water space?" One simple reason is that the water industry relies heavily on public funding while our nation is facing a deficit many voters find unacceptable. Regardless of our thoughts on the deficit, we are unlikely to change this reality of restricted federal funding levels.
Another reason for this disparity in investment has to do with the value placed on these two resources. Oil prices have historically been managed by OPEC in an effort to enhance the economies of member nations. Simply put, if you do not have the money to fill your automobile with fuel, you do not drive. If you own a factory and cannot secure the energy to operate the equipment, you go out of business.
Oil also has a lifestyle value not associated with water. The lifestyle value of oil becomes obvious when gasoline prices soar to more than $4 per gallon. At these prices, people accustomed to jumping into their sport utility vehicles and heading for the mountains on summer vacation start to notice that their budgets are very limited. It is fair to say that people do not feel similar economic pressure when putting the garden hose in their pools during these same summer months.
Water, unlike oil, is essential for maintaining life and cannot be priced solely for the benefit of those possessing the reserves or distribution network. Nevertheless, the correct valuation of water has an essential role in funding investment for sustainable development. We must start to make a much more effective case for higher water rates with our elected officials and, even more importantly, with our neighbors. Until water is fairly priced, we will have limited funding to solve the issues facing our industry.
Private investment is also lower for water than might be expected. The reason for this investment gap has less to do with the overall spending levels for water and wastewater treatment than with the balance of risks and rewards facing companies that wish to launch innovative new solutions for treatment. In our industry, the manufacturer is usually responsible for development costs and the risk associated with bringing a solution to market.
Unfortunately, in many cases the rules for awarding bids in our industry take away the incentives needed to make these investments profitable. Too often, the lowest bidder is highly favored by the process, even when another solution offers a better lifecycle cost for the community. Additionally, manufacturers are faced with the long, costly and potentially risky process of piloting the initial project only to be required to offer extended guarantees on the first several installations.
As an industry, we have made tremendous strides in safeguarding the world's water sources. After all, it was just over 40 years ago that Lake Erie was considered dead and the Cuyahoga River was burning. Going forward in an environment characterized by restricted federal budgets will require us to rethink how we foster and incentivize innovation.
About the Author: Mark Turpin is Vice President of Strategic Marketing and Business Development at Parkson Corp. He also serves on the WWEMA Board.
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