How Should Key Players Respond?
By Chris Shaffner
Water providers play an essential role in stopping the spread of COVID-19. After all, how many PSAs have you seen urging you to wash your hands thoroughly and frequently?
However, water providers still face massive challenges that threaten their ability to continue providing clean, safe water to all. During the pandemic, water providers have continued to provide services to households unable to pay and resumed service to households with outstanding debts. That, coupled with a severe drop in usage from commercial customers, adds up to a 20 to 40 percent loss in revenue — according to the National Association of Clean Water Agencies, that’s $12.5 billion or more.
The water industry has pleaded with Congress to include aid for this important utility in the next stimulus bill, but it remains to be seen whether that will come to pass. If no federal aid is forthcoming, water providers will be forced to make up for the loss by increasing rates.
Water Industry Woes Run Deep
The financial woes the water industry faces make it difficult for providers to engage in continuity planning and guarantee their ability to assist vulnerable populations into the future.
Prior to COVID-19, the water industry was already challenged by a complicated network of public and private providers, a notorious backlog of infrastructure updates and maintenance, and decreasing government budgets. In fact, the United States’ water systems are 20 years behind infrastructure investments and require $743 billion to get back up to speed.
Likewise, looming retirement waves are a significant concern. According to the U.S. Bureau of Labor Statistics, about one-quarter of the U.S. labor force will be aged 55 and older by 2024. Adding to this, the oldest generation of workers — Baby Boomers — is set to retire in the coming decade. With this, we can expect all industries to lose a significant portion of their workforce and leadership (as well as the institutional knowledge these employees hold) within the next five to 10 years.
Just as other industries will need to make plans that address this “gray tsunami,” so will the water industry. At one large rural Iowa water system, for example, half of the staff is 50 or older, and a little over one-quarter is between 40 and 50. In recent months, multiple key employees have either passed away or taken a leave of absence due to health issues. Water providers all across the country are dealing with similar scenarios, and as much as 50 percent of its workforce will retire in the next 10 years.
During COVID-19, however, this aging workforce poses an even bigger problem: Not only are older workers more vulnerable to the virus, but the work they perform also cannot be done remotely.
Water Providers Are Running Out of Options
The pandemic is nothing short of an emergency infrastructure issue. To put its challenges into perspective, in a May 2020 survey of tribal and rural water and wastewater systems, the RCAP Network found that under the current conditions, nearly one-third of systems will be unable to cover costs longer than six months. In addition, more than 40 percent of respondents rely on a skeleton crew of one or fewer full-time operators and make do with part-time staff or volunteers.
Under such financial constraints, how can providers ensure the continuity of their services while keeping employees safe? How can they continue covering costs for the 43 million Americans living in poverty? Already, water providers in a number of states have continued ending service for nonpayment, putting low-income populations at greater risk of contracting COVID-19.
Ways to Take Action
Water providers simply cannot continue to operate with the current losses to revenue without assistance from federal and state resources; this will lead to vulnerable populations losing access to clean water in the short term. And in the long term, they could move toward rate increases in an attempt to close revenue gaps.
Stakeholders must take action to alleviate the unprecedented pressure water providers face. An essential first step is advocating for more funding through measures such as the HEROES Act, a relief package proposed in May that earmarked $1.5 billion to assist struggling consumers in paying their water bills and an additional $375 billion to cover municipalities’ revenue shortages.
Water providers must also work to solve staffing issues to ensure their work can continue uninterrupted through this crisis and the next. One way is to support an apprenticeship program that can equip new workers with in-demand skills. This includes educating them on regulatory standards, infrastructure needs and upkeep, disaster response, and other key qualifications in order to replace the coming loss of institutional knowledge as the current workforce retires.
Of course, many of us are well aware of the looming issues present in the systems that ensure our communities’ survival, from the food supply chain to utility providers. Regardless, the COVID-19 pandemic has made these problems much more obvious — not to mention infinitely more complex. The virus’s significant impact on our water systems should be nothing less than a wake-up call for utilities and governments. Water systems across the globe are facing an unprecedented emergency, and taking action now is the best way to ensure a safer, more equitable future.
Chris Shaffner is the senior vice president of the Water and Community Facilities division at CoBank, a national cooperative bank serving vital industries across rural America by providing loans, leases, export financing, and other financial services in all 50 states. Chris oversees the strategic growth and management of CoBank’s water infrastructure lending, rural healthcare investments, and rural equity funds. Before joining CoBank, Chris held various leadership positions in both public and private organizations.