THE POST-ELECTION FUTURE OF WATER--PART II

Two powerful forces likely will define both the near term future as well as the longer term future of water in this country. First, an increasing awareness is probable that fresh water is a very limited resource and is becoming more so due to demand and to environmental change. This acknowledgement, in turn, will drive efforts to limit water uses to protect the resource. The second powerful force may be the federal government, which under the guise of protecting water resources, can be expected to more strictly regulate water use and quality.

Here are some of the potential future trends that may develop:

1. Water Allocation. The federal government may seek to regulate the allocation of water sources of supply as between regions of the country. Such allocation could involve ground water as well as surface water river and lake sources. Allocations could be effected by use of pipelines as well as by limits on withdrawals.

2. Cap and Trade. As one feature of allocation, the government could initiate a broad cap and trade program for all water utility sources of water supply. By analogy, there already is a water quality trading program called the "Ohio River Basin Interstate Water Quality Trading Project," designed to reduce agricultural nutrient load runoff.

3. Expanded Metering. Also related to allocation and conservation of water, the future may see universal required metering of private residential and commercial wells, with penalties for exceeding permitted withdrawals. For customers of water utilities, there could be corresponding mandatory inverse rate block structures with surcharges for excess water use.

4. Limited Fracturing. It is likely that more strict regulation of hydraulic fracturing water will be imposed--not only to protect water sources but more importantly to promote political desire for alternative sources of energy and to discourage reliance on oil.

5. New Water Sources. The federal government will continue to promote, through loans, grants and guarantees, development of alternative or non-traditional sources of water supply. Beside desalination, these could include mandatory reuse of highly treated wastewater and mandatory collection and use of rain water.

6. Regulation, Regulation, Regulation. More regulation of alleged contaminants in water, and more regulation of water use, likely will be the agenda of EPA. It can be expected to be aggressive in stretching its regulatory and enforcement programs, particularly under its National Enforcement Initiative and its notion of "environmental justice." In turn, more court challenges to agency action will result.

7. Infrastructure. Everyone has been talking about the urgent need to replace aged water and wastewater plant and to upgrade facilities to maintain regulatory compliance, but the predicted cost is huge and utilities seem to be waiting for federal government financial assistance. The more utilities will wait, the higher the price tag and urgency will become.

8. Rates. So, who will pay? Customers of water utilities can expect to pay substantially higher rates in the future, due to regulatory requirements and infrastructure replacements and upgrades. In the near term, rates could be approaching $10 or more per 1,000 gallons--or, in other words, a monthly water bill will be almost as much as the cable or telephone bill!