Add Water Systems to U.S. Infrastructure Challenges, Says 'Infrastructure 2010: An Investment Imperative'

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Apr 13, 2010, 12:00 ET

New Research Compares Urban Markets in U.S. and Overseas, Urges Changes in Land Development Patterns

Report Also Shows China and EU Continue to Outpace U.S. in Transportation Upgrades

BOSTON, April 13 /PRNewswire-USNewswire/ -- More and more urban areas throughout the United States – in both dry and rainy locales -- are facing growing pressures on their water infrastructure systems, necessitating both greater investments for overhaul and a change in development patterns that are more conducive to conservation, according to Infrastructure 2010: An Investment Imperative, a new publication released today by the Urban Land Institute and Ernst & Young.

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Citing "water profligacy as an American way of life," the report cautions: "Most water districts do not charge ratepayers full outlays for constructing and maintaining systems…As a result, businesses and households tend to use water inefficiently and don't conserve, even though per-capita water demand could outstrip future availability in some parts of the country…We are starting to see the limits of where people can go (to live)." The supply/demand conundrum, it notes, stretches from arid California, Colorado and Arizona to humid Georgia and Florida. The report shows that the U.S. has the highest "water footprint" in the world, using nearly 656,000 gallons per capita annually, greatly outstripping far more populous China, which uses less than 186,000 gallons per capita annually.

The integration of more concentrated land development into water management can reduce runoff and combat waste, states the report. One example: the runoff from eight homes on eight acres totals 149,600 cubic feet per year, while the runoff from eight homes on one acre totals 39,600 cubic feet per year, with the denser development saving both water and land. "Changing growth patterns in response to dwindling resources will not come easy to a nation that is not accustomed to conserving water or land," said ULI Executive Vice President Maureen McAvey. "But it's clear that regional and local problems with both water quantity and quality will continue without a broad-based cutback in public water consumption and a change in how and where we build. Water infrastructure must be viewed through the lens of sustainable growth."

"Over the past several years that we have been co-producing this report, perhaps the most troubling conclusion overall is that the world is moving ahead in rebuilding and expanding its infrastructure without the United States. Bottom line, the US is seriously threatening not only its quality of life now and for the future but also its very basic ability to compete economically with the rest of the world," said Howard Roth, Global Real Estate Leader, Ernst and Young.

"Perhaps the priority in the U.S. should be a major jobs-producing investment, aimed at rebuilding national water, transportation, and other life support systems? What ever the solution, this latest real estate report clearly shows that the rest of the world is gaining ground, and that China and the EU among others are already well on the road to recreating themselves as leaders for the new world order. The U.S. has to stop treading water and start treating water," Roth added.

"It's no secret that America's infrastructure is in desperate need of repair, but the real problem is in what you can't see," said Michael Lucki, Global Leader of Infrastructure and Construction for Ernst & Young. He added, "No other infrastructure category presents greater challenges than water. The decisions we make now will impact future generations for years to come."

The report points out that according to the World Bank, 80 countries have water shortages that threaten health and economies, and 40% of the world has no access to clean water or sanitation. Water supply cannot keep pace with demand as populations increase – creating an acute problem in America and worldwide.

Infrastructure 2010 is the fourth of an annual overview series that analyzes the infrastructure needs and compares the infrastructure policies of the United States with other countries. Previous editions focused primarily on transportation systems, consistently finding that the U.S. continues to lag behind Asia and Europe in investments in transit systems, making its urban areas less competitive globally. This year, in addition to a transportation update, the report includes a look at water infrastructure -- accessibility and availability, treatment and delivery – and highlights water issues in 14 U.S. cities as illustrative of the problems looming throughout much of urban America. The cities: Atlanta, Boston, Chicago, Denver, Houston, Los Angeles, Miami, Minneapolis/St. Paul, New York City, Philadelphia, Phoenix, San Francisco, Seattle and Washington, D.C. Together, these cities and surrounding metropolitan areas are expected to gain an additional 60 million residents between now and 2030, reinforcing the critical need to better coordinate land use planning with water availability.

Media Summary of Results:

1) The report cites four main water challenges, each of which, along with stricter conservation efforts, could be alleviated by less sprawl and more compact development to help ease the strain on existing systems:

Old pipes – Rusting and dilapidated water infrastructure leaks away gallons and risks all-out collapse.
High growth constraining supplies -- Fast-growing regions cannot sustain current land use patterns or water use practices given projected population increases. "In infertile zones, days may be numbered for refashioning dusty scrub into suburban landscapes with expansive lawns and swimming pools."
Contamination threats – Industrial chemicals and agricultural runoff permeate groundwater and settle into drinking sources. "We did a great job hooking everyone on clean up…but just scratched the surface on pollution sources."
Failure to conserve – The nation's use of water has more than doubled since 1950, due to water waste, and to neglected leaks that drip 1.25 trillion gallons annually -- the total consumption of Los Angeles, Miami and Chicago combined.

2) Of the 14 metro areas in the report, all but three – Minneapolis/St. Paul, Philadelphia, and Atlanta – have specific conservation programs in place, indicating that many local governments are actively seeking a change in consumer behavior. However, each of the areas also faces numerous challenges including old pipes, uncertain water supply and struggles with regional cooperation. Los Angeles was the only city cited as facing all three obstacles, making its water problems particularly urgent. Infrastructure 2010 holds up Australia as a model for water conservation, stormwater capture, and recycling, as well as more condensed land development practices, using a combination of basic and sophisticated techniques that could be applied in U.S. cities and others globally. (Residents pay $3.87 per cubic meter for water in Sydney; in Los Angeles, they pay $2.21.)

3) The report offers solutions to the nation's water infrastructure problems that are similar to those recommended for transportation issues, in that the solutions aim to foster collaboration among different governmental entities, incorporate land use planning into infrastructure planning, and accept higher user costs as a necessity. Among the "fixes" specific to water:

Use federal allocations to encourage the creation of long-range regional management programs to integrate water supply and conservation strategies with population projections, agricultural needs and utility demand.
Face reality, in that consumers and businesses will have to pay more to ensure reliability and safe supplies.
Give top priority to repairing and upgrading existing systems.
Incorporate land use into water management, including restricting development in areas without ample future water resources; using only native species in landscaping; building more compactly to reduce runoff and enhance retention.
Protect ecosystems to enable more natural storage and restoration.
Use all available resources, including capturing rainwater, recycling wastewater, recharging groundwater, and making nonpotable water potable.
Incentivize conservation by more closely linking water costs to system usage, repair and maintenance.
Invest in desalinization technology.

4) In addition to the research into water infrastructure systems, Infrastructure 2010 also tracks transportation investments made by the U.S. and countries overseas, particularly in light of the recession. Despite the economic downturn, Europe and Asia continued to invest hundreds of billions of dollars in infrastructure upgrades, while U.S. efforts have remained more limited, primarily targeting existing work revived by the economic stimulus package, and $8 billion for new high-speed rail lines that, while significant by U.S. standards, is a small percentage of what is actually needed to build the rail projects. The report rates progress made over the past year in various areas:

Stimulus funds -- used to fund existing stand-alone projects with minimal long term impact
Forming a national infrastructure policy – dialog initiated, no policy enacted or moving through legislative process
Generating new revenues – no progress on raising gas taxes, user fees; too politically toxic
Silo busting – signs of hope, as the U.S. Department of Housing and Urban Development, U.S. Department of Transportation, and Environmental Protection Agency announce new Partnership for Sustainable Communities
New transportation funding legislation – stalled
National infrastructure bank serving as private capital source -- stalled

5) As in previous Infrastructure reports, Infrastructure 2010 urges a far greater commitment by the U.S. "Economic fallout, competing priorities, and sticker shock prevent the country from aggressively addressing a slow-motion meltdown, the consequence of underinvesting for decades…In the meantime, inertia has its own price. The more we let things go, the more expensive the costs to fix and rebuild," the report states. "The world order now begins to pass America by as countries in the European Union and Asia, in particular China, continue to implement policies to integrate rail, road, transit, airport and seaport networks to serve major economic hubs, using 21^st century technologies and systems."

6) A brief overview of infrastructure activity abroad – investments, major projects, and challenges:

China – China leapfrogs the rest of the world when it comes to building modern transport infrastructure, investing hundreds of billions of dollars in new roads, dams, mass transit, high-speed rail, ports and airports. The government has directed most of $600 billion in stimulus funds to large-scale infrastructure, including nearly 10,000 miles of new high-speed rail to be completed by 2020.
Japan – Japan has employed public works stimulus to boost its lackluster economy for two decades, building new roads and new airports, and expanding its "bullet" trains. Now it faces population losses and an aging population, leaving it with an overdeveloped infrastructure system offering more capacity than is warranted by demand.
South Korea – In the country's pipeline: a 93-mile underground road network in Seoul budgeted at $9 billion, a $3 billion expansion of Incheon International Airport, $2.3 billion in green energy initiatives, and a $19 billion cleanup of major rivers, all demonstrating the country's ongoing commitment to advancing its infrastructure systems.
Singapore – Singapore enhances is reputation for acclaimed infrastructure with the completion of the Marina Barrage, a $170 million hydroelectric dam project that integrates flood control, green technologies and recreation features.
European Union – The EU provides $630 million to member nations to spend on rail links between countries, including high-speed lines. The push to create jobs advance infrastructure plans, but the short-term increased spending is likely to be followed by a slowdown to focus on the deficits created.
United Kingdom – The UK adopts a combination of large-scale and small-scale infrastructure initiatives to reduce congestion around London. The 73-mile Crossrail tunnel will connect Heathrow Airport to the eastern suburbs; and outside the city, the Eurostar bullet train now extends to Amsterdam.
France – France injected $1.21 billion in stimulus funds into its transport sector in 2009, and moves ahead with plans to double its high-speed rail system to 2,500 miles by 2020. The government also aims to be the world leader in developing infrastructure to support use of electric and hybrid electric cars.
Germany – A consortium of German industrial, energy and finance companies pursues a $556 billion solar energy project to transport solar-generated electricity from state-of-the-art plants in the Sahara Desert to Germany and other European countries. It could supply as much as 15 percent of Europe's energy needs by 2050.

About the Urban Land Institute

The Urban Land Institute (www.uli.org) is a nonprofit education and research institute supported by its members. Its mission is to provide leadership in the responsible use of land and in creating and sustaining thriving communities worldwide. Established in 1936, the Institute has nearly 33,000 members representing all aspects of land use.

About Ernst & Young

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Ernst & Young refers to the global organization of member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.

About Ernst & Young's Global Real Estate Center

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SOURCE Urban Land Institute