Drinking Water and Wastewater Infrastructure in Appalachia An Analysis of Capital Funding and Funding Gaps Jeff Hughes, Richard Whisnant, Lynn Weller, Shadi Eskaf, Matthew Richardson, Scott Morrissey, Ben Altz-Stamm The UNC Environmental Finance Center School of Government The University of North Carolina at Chapel Hill July 2005 ii Drinking Water and Wastewater in Appalachia [This page intentionally left blank] Drinking Water and Wastewater in Appalachia iii Contents List of Figures ............................................................................................................................vii List of Tables............................................................................................................................... ix Acknowledgments ..................................................................................................................... xi List of Abbreviations...............................................................................................................xiii About UNCEFC ......................................................................................................................... xv Executive Summary .....................................................................................................................1 1 Introduction ........................................................................................................................13 Background on Appalachia ................................................................................................... Background on the Appalachian Regional Commission .................................................. Study Goals and Research Questions .................................................................................. Levels of Analysis ................................................................................................................... Study Components................................................................................................................. Study Limitations.................................................................................................................... Limits of the Data.................................................................................................................... 2 Water and Wastewater Services in Appalachia............................................................27 Drinking Water........................................................................................................................ Wastewater .............................................................................................................................. Ambient Water Quality.......................................................................................................... Environmental Characteristics Influencing Service........................................................... Summary .................................................................................................................................. 3 Assessments of Needs for Water and Wastewater Infrastructure in Appalachia...........................................................................................................................57 Scope and Implementing Organizations ............................................................................. Purpose..................................................................................................................................... Frequency and Planning Period ........................................................................................... Methodology............................................................................................................................ Accuracy................................................................................................................................... Undocumented and Unidentified Needs ............................................................................ iv Drinking Water and Wastewater in Appalachia 4 Capital Needs for Water and Wastewater Infrastructure in Appalachia ................73 The Clean Watersheds Needs Survey.................................................................................. The Drinking Water Needs Survey ...................................................................................... Other National Studies........................................................................................................... State-Level Studies.................................................................................................................. Needs by Physiographic Region........................................................................................... Needs by County Economic Status ...................................................................................... Regulatory Needs as Water and Wastewater Funding Needs......................................... Application of Needs Estimates to the Policy Challenges Facing Appalachian Communities ................................................................................................................... 5 Sources of Funding for Water and Wastewater Infrastructure ................................93 Current Revenues and Reserve Funds................................................................................. The Private Capital Market ................................................................................................... Public Funding Programs ...................................................................................................... 6 Financial Management and Funding Strategies .......................................................111 Major Funding Challenges and Gaps .................................................................................. Regionalization and Local Partnerships.............................................................................. Full-Cost Pricing...................................................................................................................... Rate-Making Strategies for Low-Income Customers......................................................... Targeted Assistance for Low-Income Customers .............................................................. Asset Management................................................................................................................. Improvement of Water Efficiency ........................................................................................ Planning Grants and Assistance ........................................................................................... Improved Access to the Private Capital Market................................................................. Offering of Attractive Loan Terms ....................................................................................... Establishment of State Funding Sources.............................................................................. Pooled-Loan Programs........................................................................................................... Streamlining of, Coordination of, and Cooperation among Funding Programs .......... The Role of Private Service Providers.................................................................................. A National Trust Fund ........................................................................................................... Optimization of Grant Programs.......................................................................................... Summary .................................................................................................................................. Drinking Water and Wastewater in Appalachia v Appendices A. Clean Water Needs per Appalachian County, 2000 ..................................................... B. Public Funding Distributions to Each Appalachian County, 2000–2003 .................. C. Appalachian Region Water and Sewer Needs Assessment: Consultations and Discussion Forums ................................................................... D. Drinking Water and Wastewater Infrastructure Funding Survey.............................. E. Community and System Level Case Studies.................................................................. Accident, Maryland ................................................................................................... Corinth, Mississippi................................................................................................... Jasper, New York ....................................................................................................... McDowell County, West Virginia, and Letcher County, Kentucky................... Weaverville, North Carolina .................................................................................... West Virginia—American Water............................................................................. F. Environmental Characteristics Influencing Service....................................................... G. Methodology for Projection of Drinking Water Needs from the Drinking Water Needs Survey................................................................................. H. Regulatory Needs as Water and Wastewater Funding Needs ................................... I. Methodology for Compilation of the Master Funding Database ................................. J. Summaries of Selected Federal