Study on Investment in Water and Wastewater Infrastructure and Economic Development January 2014 Edward J. Collins, Jr. Center for Public Management ___________________________________________________________ McCORMACK GRADUATE SCHOOL OF POLICY AND GLOBAL S TUDIES ___________________________________________________________ THIS PAGE IS INTENTIONALLY BLANK TABLE OF CONTENTS Executive Summary ............................................................................................................................1 Studies on Investment in Infrastructure ............................................................................................. 11 Overview ...................................................................................................................................... 11 Answers to Key Research Questions ............................................................................................... 12 Massachusetts Case Studies .............................................................................................................. 15 Overview ...................................................................................................................................... 15 Urban Redevelopment: Seaport District, Boston, MA ...................................................................... 19 LandReuse: Myles Standish Industrial Park, Taunton, MA ............................................................... 27 Community-wide Water Moratorium: Stoughton, MA .................................................................... 35 SWMI Impacted Community: Naval Air Station South Weymouth, Weymouth, MA ........................... 41 Unrealized Opportunity: Union Square & Boynton Yards, Somerville, MA ........................................ 51 Potable Water Resources .................................................................................................................. 59 Overview ...................................................................................................................................... 59 MWRA Potable Water System........................................................................................................ 63 Non-MWRA Water Systems and Sources ........................................................................................ 67 Potable Water Systems Summary .................................................................................................. 75 Current and Future Challenges in Water Availability........................................................................ 77 Wastewater Treatment Systems ...................................................................................................... 113 Overview .................................................................................................................................... 113 MWRA Wastewater Treatment System ........................................................................................ 116 Non-MWRA Wastewater Treatment Facilities ............................................................................... 123 Current and Future Challenges in Wastewater Treatment ............................................................. 133 Conclusion ..................................................................................................................................... 155 Appendix A: Summary of Studies on Infrastructure Investment ........................................................ 159 Appendix B: How Water is Collected in Massachusetts ..................................................................... 169 Appendix C: A Guide to MetroFuture .............................................................................................. 177 Appendix D: High and Medium Stress Basins ................................................................................... 193 Appendix E: Municipal Water Use Restructions ............................................................................... 197 Appendix F: Case Studies for Framingham & Lynnfield ..................................................................... 199 Appendix G: MassWorks Funded Projects (2011-2013) .................................................................... 205 Bibliography ................................................................................................................................... 207 THIS PAGE IS INTENTIONALLY BLANK EXECUTIVE SUMMARY Purpose & Methodology The Edward J. Collins, Jr. Center for Public Management in the John W. McCormack Graduate School of Policy and Global Studies at the University of Massachusetts Boston was tasked by the Massachusetts Water Resources Authority Advisory Board (MWRAAB) with asking and answering a very fundamental question relating to public infrastructure: “What is the relationship between investment in water and wastewater infrastructure and economic growth?” To do so, Center staff not only researched the positive results of investing in infrastructure, but also took time to consider what failing to invest in adequate water and wastewater infrastructure might mean. Additionally, the Center sought to identify some of the challenges facing Massachusetts today and in the future. The Center divided the task into four components: 1) review of academic research on the topic of infrastructure investment; 2) preparation of Massachusetts case studies illustrative of different successes and challenges; 3) documentation of the state of water and wastewater infrastructure in the Commonwealth today; and, 4) identification of challenges that presently exist and those that are not too far over the horizon. Where possible, the Center attempted to quantify the financial implications of investing or failing to invest, but it should be understood that these are only order of magnitude figures; significantly more detailed analysis would be needed to determine the true cost. One of the hoped for outcomes of this report is that it will prompt more detailed assessment at the municipal, regional, and state level into the infrastructure issues identified herein. Summary Chapter 1: Academic Research Academic research into the relationship between investment in infrastructure and economic development began in the 1980s and, over time, the earliest findings have been refined and enhanced. These studies used national level data sets to make findings applicable to the nation as a whole. After initially finding that a positive relationship exists between investment in infrastructure and economic opportunity, more recent analysis has gone so far as to attempt to quantify the return on infrastructure investment. Some studies analyzed investment in water and sewer infrastructure specifically and found a particularly positive relationship in this area. Important study findings include: A correlation exists between investment in infrastructure and increases in the Gross Domestic Product. In particular, the massive infrastructure investment that occurred after the end of World War II not only positively correlated with economic growth, it showed a relationship to worker productivity which grew dramatically at the time. Not only was infrastructure investment found to be an essential component to Study on Investment in Water and Wastewater Infrastructure and Economic Development Page 1 Edward J. Collins, Jr. Center for Public Management the "’golden age’ of the 1950s and 1960s,”1 a correlation was separately found between the decline in labor productivity of the 1970s and 1980s and the decline in the level of public investment in infrastructure at the same time.2 Government investment in infrastructure has a far greater impact on private investment decisions than any other type of government expenditure.3 Although federal investment has the greatest influence, state level investment “has a positive impact on several measures of state-level economic activity: output, investment, and employment growth.”4 Investment in water and sewer was actually found to have a greater impact on economic growth than investment in transportation. As one study found, “aggregate public capital and two of its components (highways, water and sewer) make a positive contribution to state output. Water and sewer systems have a much larger effect on state output than highways and ‘other’ public capital stock.”5 Investment in water and wastewater infrastructure can stimulate private investment, which in turn, generates municipal and state revenue. One study of rural development in particular found that “[e]very dollar spent in constructing an average water/sewer project generated almost $15 of private investment, leveraged $2 of public funds, and added $14 to the local property tax base.”6 Another study found that “a $1 investment in water and sewer would generate $2.03 in new taxes over the same period (20 years), on average, of which $0.68 is new state and local tax revenue.”7 Authors of the studies do caution that while their findings are positive, this does not mean that every investment will produce the results found in the aggregate. The effects of infrastructure investment vary by location, type, and scale, and only project-specific analysis can reveal if a positive return will be generated by a particular expenditure of public funds. One of the more prolific authors on this topic, Alicia Munnell, Senior Economist at the Federal Reserve Bank of Boston underscored this point when she wrote, “Aggregate results, however, cannot be used to guide actual investment