Will New Federal Law Facilitate Privatization of U.S. Water?
A major piece of legislation funding the development and improvement of water-related infrastructure passed Congress last week for the first time in nearly a decade, and President Barack Obama is expected to sign the bill soon.
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Yet public interest groups warn that a key provision in the law would complicate public investment in drinking water and wastewater systems in big cities and small towns alike. The end result, they say, would be to strengthen privately-managed or -owned water systems while leaving the federal government to take on the risk of these investments—essentially subsidizing water privatization.
“This law will facilitate the privatization of water systems and prioritize funding for privatized systems,” Mary Grant, a researcher for the water program at Food & Water Watch, a watchdog group here, told MintPress News.
“The basic problem is that it will only fund up to 45 percent of project costs, but also stipulates that the rest cannot be made up through the use of tax-exempt bonds,” Grant continued. “Yet such bonds are the primary way in which local governments fund infrastructure projects, so why would they try to make use of this funding?”
The broader law, agreed upon by large majorities in both the House and Senate over the past week following a year of negotiation, is known as the Water Resources Reform and Development Act. The full bill authorizes funding for a spectrum of new water infrastructure projects—particularly around ports and waterways, including flood protection and restoration—worth some $12.3 billion, though this money will still have to go through an appropriations process.
Assuming that President Obama signs it, the Water Resources Reform and Development Act will be the first such water-related funding package to become law since 2007. Even then, the 2007 bill passed over the threat of veto from President George W. Bush, primarily due to budgetary concerns. As with any large funding bill, the act has received criticism from conservatives worried that Congress will not be able to provide adequate oversight for what they expect to be a frenzy of project requests.
The bill also includes provisions aimed at dealing with what experts say is a multi-billion-dollar funding gap for drinking water and wastewater systems across the country. Last year, the U.S. Environmental Protection Agency (EPA) estimated that some $384 billion in improvements would be needed in U.S. drinking water infrastructure over the next two decades. The EPA also found that many of the country’s 73,400 water systems are between 50 to 100 years old.
“[T]he nation’s water systems have entered a rehabilitation and replacement era in which much of the existing infrastructure has reached or is approaching the end of its useful life,” EPA Acting Administrator Bob Perciasepe said at the time. “This is a major issue that must be addressed so that American families continue to have the access they need to clean and healthy water sources.”
While Congress is receiving widespread plaudits for finally acting on this shortfall, critics are worried that the final law will be detrimental to communities across the country.
Dwindling Public Funding
According to data provided by Food & Water Watch, federal spending on improvements to drinking water and wastewater systems since the late 1970s have dwindled by some 80 percent. Since the late 1990s, the group says, federal grants have offered just $15 billion for this purpose.
In 2012, dozens of federal lawmakers wrote to the congressional leadership to highlight this situation, citing rising concerns among mayors, public water systems directors and others. The lawmakers noted that federal funding for water systems made up just three percent of total costs, down from 78 percent 35 years earlier. This shortfall, they warned, leaves “cities and towns across the country bearing the difficult challenge of pulling together funds for public water systems.”
The new Water Resources Reform and Development Act does attempt to ameliorate this problem, making available $175 million in funding over five years. But the part of the law that focuses on this issue, known as the Water Infrastructure Finance and Innovation Act, does so primarily by steering communities toward public-private partnerships.
It is unclear whether this is by design. As Food & Water Watch’s Grant notes, a central issue is the fact that the Water Infrastructure Finance and Innovation Act does not allow communities to raise funding for infrastructure through the issuance of tax-exempt bonds, a process that the watchdog group says has raised more than $1.6 trillion for local and state infrastructure projects over the past decade.
It appears, however, that this option was only removed after negotiations with an eye toward the federal deficit, following a budgetary “scoring” by the Congressional Budget Office. Groups representing the municipal water sector say the Water Infrastructure Finance and Innovation Act won’t work for their members.
“We have huge wastewater infrastructure needs, so we’ve been supportive of having more tools in the toolbox to help communities pay for upgrades and new projects,” Hannah Mellman, legislative manager at the National Association of Clean Water Agencies, a lobby group that represents the municipal wastewater sector, told MintPress.
“Yet the tax-exempt bond exemption will make [the Water Infrastructure Finance and Innovation Act] pretty unworkable for our members. That’s not to say that they wouldn’t use [the Water Infrastructure Finance and Innovation Act], but if they can’t finance their side of projects with tax-exempt bonds we don’t see how it will be usable. So we’re disappointed to see that in the final bill.”
Funding criteria under the bill will also be different than under traditional federal water assistance. For instance, the latter has always been in part based on issues related to public health, but the Water Infrastructure Finance and Innovation Act requires no such consideration. Instead, criteria for funding under the act will include issues that strike some observers as odd — for instance, how much of the money would go to areas with significant energy development, or whether the projects already have private financing partners.
Access and Equity
On the one hand, then, the Water Infrastructure Finance and Innovation Act likely will not offer communities large or small the funding required to address the water infrastructure needs that the federal government admits are necessary and widespread. On the other hand, watchdog groups say the bill’s impact could be more far-ranging still, touching on issues of access and equity.
“We are alarmed by the implications of this bill, which would open the doors to an increase in water public-private partnerships in the U.S. and effectively subsidize water privatization,” Erin Diaz, the director of Public Water Works!, a campaign at Corporate Accountability International, told MintPress in a statement.
“The privatization of water systems around the globe has often resulted in devastating results for the economy and people—rate hikes, layoffs, labor abuses, environmental damage and public safety risks—all while failing to invest in essential infrastructure.”
In 2012, Diaz’s office published an exhaustive report on the international experience of water privatization over the past two decades. With a focus on the World Bank’s role in this issue and a call for the multilateral lender to divest from private water companies worldwide (it has yet to do so), the report undermines the central rationale in favor of privatization: that corporate efficiency leads to lower operating costs.
Such findings have come up repeatedly in the U.S., as well, with surveys finding that investor-owned utilities in dozens of U.S. states charge around one-third more than those owned by the public.
Profit-driven systems also experience problems in deciding where to extend service. Driven by profit rather than public access, companies have at times proved reluctant, for instance, to provide services in low-income areas or very small communities.
Indeed, Grant says this was one of the original reasons that U.S. water infrastructure—much of which was originally privately owned—was taken over by the public sector during the early twentieth century. As this trend has reversed in some places over recent decades, similar concerns have again cropped up.
“Though water privatization remains fairly rare, there has been a lot of work on the part of private utilities trying to expand their operations,” Grant said.
“In West Virginia, for instance, a private water utility has been buying up other utilities, and the result has been smaller households have struggled in attempts to force the company to serve their areas. The company was also trying to cut back on its investments after the state government wouldn’t allow the rate increases it wanted to impose.”
Meanwhile, even as lawmakers are undercutting municipalities’ ability to raise money for water infrastructure from tax-exempt bonds, lobby attempts have made some headway in pushing Congress to remove legal caps on the levels to which bonds to fund private activity would be allowed in the water sector. In mid-May, senators formally proposed removing limits on what are known as private activity bonds for water-related projects, prompting applause from the National Association of Water Companies, a group that lobbies on behalf of water companies.
Lifting these caps would “open the floodgates to financing water privatization projects, effectively subsidized by taxpayers,” Corporate Accountability International’s Diaz told MintPress.
“This interference, present at every level of government, is just one small part of the private water industry’s strategy to expand its market across the U.S.,” said Diaz. “The provisions in [the Water Infrastructure Finance and Innovation Act] that could provide public financing to private water are just one example of the many policy avenues the private water industry pursues to privatize water and weaken its greatest competitor—publicly-controlled and democratically-governed water systems.”
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By Dr. Kate Raynes-Goldie
Of all the plastic we've ever produced, only 9% has been recycled. So what happened to all that plastic you've put in the recycling bin over the years?
Triangle of Mistruths<p>The myth created around plastic recycling has been one of simplicity. We look for the familiar triangle arrows, then pop the waste in the recycling bin so it can be reused.</p><p>But the true purpose of those triangles has been misunderstood by the general public ever since their invention in the 1980s.</p><p>These triangles were actually created by the plastics industry and, according to a report provided to them in July 1993, <a href="https://www.npr.org/transcripts/912150085" target="_blank">were creating "unrealistic expectations"</a> about what could be recycled. But they decided to keep using the codes.</p><p>Which is why many people still believe that these triangular symbols (also known as a <a href="https://sustainablepackaging.org/101-resin-identification-codes/" target="_blank" rel="noopener noreferrer">resin identifier code</a> or RIC) means something is recyclable.</p><p>But according to the American Society for Testing and Materials International (ASTM) – which controls the RIC system – the numbered triangles "<a href="https://www.astm.org/Standards/D7611.htm" target="_blank" rel="noopener noreferrer">are not recycle codes</a>." In fact, they weren't created for the general public at all. They were made for the post-consumer plastic industry.</p><p>In other words, the symbols make it easier to sort the different types of plastics, some of which cannot be recycled – <a href="https://www.ecobin.com.au/understand-recycling-codes/" target="_blank" rel="noopener noreferrer">depending on the recycling facility</a>.</p><p>"Unfortunately, just placing your plastic into the recycling bin doesn't mean it will get recycled," says Lara Camilla Pinho. She is an architect and lecturer at the UWA School of Design who is researching novel uses of plastic waste.</p><p>"The recycling system is complicated and often dictated by market demand. Not all plastic is recyclable. We cannot recycle plastic bags or straws for example."</p>
Behind the Scenes<p>So, what makes recycling plastics so difficult?</p><p>"Essentially, there are two types of plastics – thermoplastics and thermosets. While thermoplastics can be re-melted and re-molded, thermosets contain cross-linked polymers that cannot be separated meaning they cannot be recycled," says Lara.</p><p>"Even thermoplastics have a limit to the amount of times we can recycle them, as each time they are recycled they downgrade in quality."</p><p>Even when plastics are recyclable, it is <a href="https://www.theguardian.com/environment/2019/oct/13/war-on-plastic-waste-faces-setback-as-cost-of-recycled-material-soars" target="_blank">often more costly</a> than simply making new plastics.</p>
Sugar, Seaweed and Mushrooms<p>If the conventional recycling system isn't working, what else can we do with all the plastic we've created?</p><p>Lara is looking for ways to add value to recycled plastics such as using it in the design and development of architectural products. She hopes to use these architectural products to help underserved communities that are disproportionately affected by plastic waste.</p><p>In addition to recycling, we also need to find ways to reduce our use of virgin petroleum-based plastics.</p><p>Bioplastic is one such product that has been getting a lot of hype over the last few years. And although they're better than petroleum-based plastics, bioplastics also come with their own <a href="https://phys.org/news/2017-12-truth-bioplastics.html" target="_blank">set of challenges</a>.</p><p>"There are already a lot of bio-based alternatives to plastic, such as bagasse – a byproduct of sugar cane processing," says Lara.</p><p><a href="https://blogs.scientificamerican.com/observations/the-mycelium-revolution-is-upon-us/" target="_blank" rel="noopener noreferrer">Mycelium</a>, a type of fungi we most often associate with mushrooms, are also providing an interesting plastic alternative.</p><p>"In the field of architecture, mycelium is starting to be used as an alternative to plastic insulation, but also as compostable packaging and bricks," says Lara.</p><p>"The bricks take around five days to make and are strong, durable, water resistant and compostable at the end of their use."</p><p><a href="https://www.arup.com/news-and-events/hyfi-reinvents-the-brick" target="_blank" rel="noopener noreferrer">Hy-Fi Tower</a>, created by <a href="http://www.thelivingnewyork.com/living_about.html" target="_blank" rel="noopener noreferrer">The Living</a>, is an example of a building made from these bricks.</p><p>And finally, there's seaweed.</p><p>"[Seaweed is] cheap and can reproduce itself quickly without fertilizers. In architecture, there is use for seaweed as an alternative to plastic insulation but also as cladding," says Lara.</p>
More Money, More Problems<p>While all these alternatives are great, the main cause of our plastic dilemma is not scientific or technological, but economic.</p><p>As long as it remains <a href="https://engineering.mit.edu/engage/ask-an-engineer/why-is-it-cheaper-to-make-new-plastic-bottles-than-to-recycle-old-ones/" target="_blank">cheaper to create new plastics</a> from fossil fuels rather than from bioplastics or from recycling, we're going to be stuck with plastic garbage islands floating in our oceans.</p><p>The true cost to our health and our environment has yet to be included in the equation. But once it is, maybe that is when the real shift will happen.</p>
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