Engineering Inc. - May/June 2013 - (Page 4)
MarketWatch
BY G E R RY D O N O H U E
F
or firms in the water/
wastewater market, the
projected 3 percent
annual growth in 2013 is cause
for enthusiasm.
“I’ve been in the water business for 35 years and this has
been the longest flat period I’ve
ever seen,” says Rob Andrews,
chief executive of water at
AECOM. “Indications are since
it’s not getting worse, it’s going
to get better.”
In the four years following
the 2008 global economic
crisis, the water supply market
failed to grow in three of them
(2009–2011), according to a
report by industry consultants
FMI Corp. Two of those years
saw declines, including an 11
percent drop in 2011.
Economic indicators suggest
the tide, at long last, has begun
to turn. FMI forecasts 4 percent
annual growth in 2014 and 5
percent in both 2015 and 2016.
“Water is one of those industries that we can’t do without,”
says Ralph Eberts, executive
managing director of professional services for Black &
Veatch’s global water business.
“We have to invest and continue to invest.”
Necessary Growth
“The main driver in the water
business is replacing aging
infrastructure,” says Andrews.
According to the American
Water Works Association’s
recent Buried No Longer report,
more than 1 million miles of
water and wastewater pipes run
underground in this country,
and “much of it is reaching
the end of its useful life and
approaching the age at which it
needs to be replaced.”
4
ENGINEERING INC.
MAY / JUNE 2013
Climate change is also affecting the industry. “We have
severe drought in some places,
like Texas and parts of California, while at the same time we
have severe flooding in others,”
explains Eberts. “The infrastructure is being stressed. Up to now
we’ve tended to react to disasters. We’ve got to address these
things before they hit us hard.”
A third factor is the expansion of the water utility’s traditional scope of service. Rather
than focus solely on treatment
and distribution, many utilities
are now involved in reclaiming
and reusing water, finding commercial uses for the nutrients
and latent energy in wastewater
and using green infrastructure
to manage stormwater, for
example.
“We see good opportunities
in helping utilities create robust
asset management plans, put
together risk plans and prioritize
where to invest their limited
amounts of money,” says Eberts.
Federal and state regulation
will also likely force significant
investment. “On the wastewater
side, many clients are still dealing with consent orders so we
expect to see a lot of activity,”
says Michael MacPhee, president of the water division for
ARCADIS U.S.
Falling Behind
The United States Conference
of Mayors recently estimated
that water and wastewater
investment needs could total as
much as $80 billion annually
for the next 20 years.
Current funding levels
are less than half that. FMI
projects the water sector will
reach $39 billion in funding
VICTORIA SNOWBER/GETTY IMAGES
Slow but Steady Increases for
Water/Wastewater Market
in 2013 and $45 billion by
2016. A gap between what is
spent and what is needed each
year pushes those costs into the
next year.
“When it comes to water,
you can only defer investment
for so long,” says Eberts. “At
some point, you have to do it.”
The federal government was
once a robust source of funding for the water industry, but
no longer. In the wastewater
sector, federal funding has
decreased by more than 90
percent since the 1980s to just
$1.4 billion in 2013. Drinking
water appropriations in 2013
totaled only $908 million.
Congress appears to have
taken note. The House is
working on extending the
Clean Water State Revolving
Fund and doubling funding
for wastewater projects to
$13.8 billion over five years.
Other legislative efforts include
the Water Infrastructure
Finance and Innovation Act,
which would provide lowinterest federal loans and loan
guarantees for water projects
and exempt water and wastewater projects from the state
volume cap on private activity
bonds.
Ratepayers will continue to
account for the largest share
of utility funding, but they are
constrained in many markets
by local politics.
“Many of the big enterprise
water authorities have full-cost
pricing, giving them the rate
structure to replace their aging
infrastructure, but there’s a
lot of resistance in the smaller
and medium-sized cities and
they are gridlocked,” says
AECOM’s Andrews.
According to a 2012 USA
Today analysis of water rates
in 100 municipalities, average
monthly bills have climbed
75 percent since 2000, but
most of that increase has come
in larger cities. In Atlanta,
for example, rates are up 233
Table of Contents for the Digital Edition of Engineering Inc. - May/June 2013
Engineering Inc. - May/June 2013
Contents
From ACEC to You
Market Watch
Legislative Action
2013 Engineering Excellence Awards
Annual Convention Wrap-Up
Mobile Power
Guest Column
Business Insights
Members in the News
Mergers & Acquisitions
Engineering Inc. - May/June 2013
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