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Infrastructure Gap
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In 2002, the U.S. EPA released the Clean Water and Drinking Water Gap Analysis Report. This report estimated that if investment in water and wastewater infrastructure doesn’t increase to address anticipated needs, the funding gap over the next 20 years could grow to $122 billion for Clean Water capital costs and $102 billion for Drinking Water capital costs. Infrastructure needs are great and communities have to address challenges related to aging infrastructure and growing and shifting populations. But the problem is manageable if utilities undertake the work that needs to be done to address infrastructure and if the public understands the costs that will be needed to ensure that they have access to safe drinking water.
- Clean Water and Drinking Water Infrastructure Gap Analysis Report
EPA 816-R-02-020, September 2002 - Full Report (PDF) (54 pp, 2 MB) (About PDF)
- Fact Sheet (PDF) (2 pp, 105 K) (About PDF)
- 2003 EPA Forum - Closing the Gap: Innovative Responses for Sustainable Water Infrastructure
- Summary of the Water Infrastructure Forum (PDF) (11 pp, 126 K) (About PDF)
- Remarks by the Assistant Administrator for Water (PDF) (6 pp, 107 K) (About PDF)
Questions and Answers
- What was the purpose of the 2002 Gap Analysis?
- What did the study cover?
- How was the study conducted?
- What were the findings?
- How did EPA’s gap estimates compare to other estimates?
- Is the funding gap inevitable?
- How does EPA identify infrastructure needs?
- What is the Administration doing to help reduce the gap?
What was the purpose of the 2002 Gap Analysis?
The purpose of the gap analysis was to estimate the funding gap between projected infrastructure needs and spending for the water industry. EPA undertook the analysis to develop a solid basis for understanding the magnitude of the funding gaps potentially facing water systems.
What did the study cover?
The analysis covered a twenty year period from 2000 to 2019 and includes estimates of the funding gap for both capital and operations and maintenance (O&M). The scope of the report was limited to a discussion of the methods for calculating the capital and O&M gaps and did not address the policy implications of the results.
How was the study conducted?
EPA conducts periodic surveys of the nation’s water infrastructure needs. We used the estimates from these surveys as the basis for our analysis. We adjusted the estimates to account for the under-reporting of needs, particularly capital replacement. We then compared these needs to spending levels to calculate a gap. EPA submitted the analysis to a peer review panel consisting of experts drawn from academia, think tanks, consulting firms, and industry. EPA revised the projections and approaches to incorporate the comments of the peer reviewers.
What were the findings?
The analysis estimated a 20-year capital gap for clean water of $122 billion ($6 billion per year) in 2001 dollars. For drinking water, we estimated a capital gap of $102 billion ($5 billion per year). The O&M gaps for clean water and drinking water were estimated at $148 billion ($7 billion per year) and $161 billion ($8 billion per year), respectively. The report also estimated the capital and O&M gaps under a “revenue growth” scenario whereby spending levels by the water industry are projected to increase at a real rate of 3 percent per year, which is consistent with the economic growth forecast in the President’s budget. Under the growth scenario, the capital gaps for clean water and drinking water were $21 billion and $45 billion, respectively.
How did EPA’s gap estimates compare to other estimates?
Other organizations developed estimates of needs and the gap that are consistent with or greater than EPA’s estimates. Regardless of which estimate we accept, we all agree that it is important to develop a strategy to bridge the gap.
- Congressional Budget Office - Future Investment in Drinking Water and Wastewater Infrastructure (November 2002)
- General Accounting Office - Water Infrastructure: Information on Financing, Capital Planning, and Privatization (August 2002) (PDF) (83 pp, 1.2 MB) (About PDF)
- American Water Works Association - Reinvesting in Drinking Water Infrastructure (20 Cities) (May 2001) (PDF)
- The Water Infrastructure Network - Water Infrastructure Now (February 2001)
Is the funding gap inevitable?
The funding gap is not inevitable - it will only occur if we ignore the challenges posed by an aging infrastructure network. To preserve the gains we have made since the passages of the Clean Water Act and the Safe Drinking Water Act over 30 years ago, we must renew our pipes and plants at a much higher rate and examine ways to improve efficiencies in the water industry.
How does EPA identify infrastructure needs?
EPA conducts periodic reviews of infrastructure needs facing the nation’s utilities. The most recent drinking water survey (based on 2003 data) found that the nation's 53,000 community water systems and 21,400 not-for-profit noncommunity water systems will need to invest an estimated $276.8 billion between 2003 and 2023. The most recent clean water survey (based on data through January 1, 2004) identified $205.5 billion in needs.
What is the Administration doing to help reduce the gap?
The current Administration recognizes the role of the federal government in helping utilities meet the challenges ahead and has committed to provide funding to EPA’s State Revolving Fund programs for clean water and drinking water infrastructure. States are using EPA funding to provide more than $3 billion a year for water infrastructure projects across the nation.