Fewell’s Focus: Making the Right Decision
Money alone will not solve our nation’s water problems
As is true for many, I have been following closely the tragic public health crisis that has unfolded in Flint, Mich., and devastated so many families. The fallout has been significant, forcing the resignation of the heads of the Michigan Department of Environmental Quality and the U.S. Environmental Protection Agency’s (EPA) Region 5 office, and prompting numerous investigations, including a criminal probe by the FBI and congressional hearings. There have been a number of pundits and pontificators, including myself, attempting to explain how something like this could happen, especially here in America, where we are blessed with the most efficient water delivery system in the history of humankind.
Last fall, I wrote in this column on the topic of utilizing incentives to alleviate water infrastructure and workforce concerns, and the importance of balancing carrots and sticks to provide the right incentives to make the right choices.
A Muddled System
When all is said and done, the failure in Flint will be linked to multiple causal factors, all of which contributed in some way to the colossal failure we witnessed. In this case, however, the incentives and disincentives, but particularly the latter, were deficient to nonexistent. I find the argument advanced by some that government does not do a great job of regulating government to be particularly poignant. Professors David Konisky and Manuel Teodoro of the University of Indiana and Texas A&M University, respectively, had this to say in a recent article in The Hill:
Environmental protection is typically thought of as a matter of government regulation of individuals and privately owned firms. But in the United States, tens of thousands of local, state and federal government agencies are subject to the same regulation as their private sector counterparts. Drinking water is perhaps the most familiar example: About 85% of Americans receive their drinking water service from a local government. The U.S. Safe Drinking Water Act (SDWA) obliges those government utilities to meet the same regulatory requirements as private, investor-owned utilities.
The trouble is that governments face incentives and constraints that make them more difficult to regulate than private firms. Unlike businesses, governments have contested, ambiguous missions and often are politically constrained from taking steps necessary for compliance … Consequently, the regulator’s usual array of enforcement instruments—fines, fees and licensure—may be potent enough to alter a private firm’s behavior, but less effective when the regulated entity is a government.
This argument is reinforced by a statement from David Uhlmann, former head of the U.S. Department of Justice’s environmental crimes section, who said in a 2009 New York Times article in regard to enforcement of the SDWA that “there is a significant reluctance within the U.S. EPA and Justice Department to bring actions against municipalities, because there’s a view that they are often cash-strapped, and fines would ultimately be paid by local taxpayers.”
Indeed, rarely, if ever, does the federal government prosecute a city or township, accompanied by a big fine, for providing contaminated drinking water to its residents. Just look at EPA’s enforcement statistics. The overwhelming majority of enforcement cases against public water systems for violating the SDWA have been delegated to the primacy states, which routinely use administrative orders mandating local governments to bring their water systems back into compliance with SDWA. While such orders work in many cases, in other cases involving recalcitrant or distressed communities, such orders often are ignored.
I want to be careful not to paint with too broad a stroke, because many communities and local leaders do an exceptional job in ensuring their residents are provided with safe, clean water. I am also mindful of the communities that desire to do the right thing, but simply do not have the financial or technical wherewithal to address their problems. Notwithstanding, negative political pressures on government officials can be directly traced to our nation’s aging and failing water infrastructure and, indirectly, to the failure of adequate oversight and governance, such as in Flint. Once again, this is not a rant against government; rather, it is simply an objective reality that must be resolved if we are to fix our nation’s water woes.
We all want our government to make the right decision, putting the public’s interest ahead of all else, but Flint is a reminder of how terribly wrong government can be.
The Case for P3s
Truth be told, the vast majority of communities in the U.S. have a monopoly on water provision. And monopolies often are characterized as unresponsive to consumer demands—not so with private water provision. As Konisky and Teodoro rightly note, the risk of reputational harm from a public health crisis, not to mention large civil and criminal penalties, is significant and can mean the success or failure of a private company. Large private water companies like Severn Trent, Suez, Veolia, American Water and Aqua, represented by the National Association of Water Companies, have an enormous incentive to do the right thing and ensure that public health and safety are their top priorities.
Many private companies operate under public-private partnerships (P3s) to help communities maintain and operate local water and wastewater systems. Such P3s are increasingly common and critical in helping communities maintain their water systems and sustainable water supplies. This is particularly important for financially distressed communities, which, more than others, need the additional expertise and support. As someone who routinely works with water providers across the spectrum of ownership and operational control, I can vouch for the benefits of local government and the private sector working together through P3s.
Throwing more money at our nation’s water woes will not fix the systemic and institutional problems that contributed to the Flint crisis. We must consider all options, including the role of the private sector.