Is killing 4,000 babies a day good customer service?

Insight from Christopher Gasson, GWI publisher

This month’s American Water Intelligence carries an analysis comparing the growth rate of US GDP and capital expenditure on water and wastewater infrastructure by municipal utilites. It shows that over the past two decades, the economy as a whole has grown more quickly than public investment in water.It is not the sort of thing you want to read in a magazine. We all want the water business to follow a long-term trend which continuously grows ahead of the economy as a whole, because it is only by investing in water that the economy can grow. The reality is different, but it should not be a cause for despair.

If anything, it should be a cause for passion: the passionate pursuit of new models for water finance which work to enable the water sector to attract the investment it needs.

The greatest investment gap is in the developing world, but the fact that America has been unable to find the trillion or so dollars which are needed to put its water and wastewater infrastructure right is not a good sign.

Even in rich countries, there is an almost universal belief that water should be paid for by someone else. In America, for example, they talk about “unfunded federal mandates”. It is a beautifully political phrase. It unites those who feel that Washington is interfering too much with those who feel that Washington is not spending enough, and ensures that nothing gets done.

And something should be done if the country wants to avoid perpetuating the idea of American decline. As Philadelphia governor Ed Rendell said at our 2010 American Water Summit, “We built the world, we built everything, and now we can’t even build ourselves.”

Typically, unfunded federal mandates refer to spending that utilities need to carry out in order to meet the regulatory standards required by the federal Environmental Protection Agency. This might involve upgrading a drinking water treatment plant so there is no repeat of the 1993 Milwaukee cryptosporidium outbreak which killed over 100 people, or separating stormwater from wastewater systems so that rivers are not poisoned every time it rains.

In any other line of business, killing customers might be considered poor service. In the water sector, however, wiping out a few dozen senior citizens and babies or poisoning rivers is considered a corollary of the funding system. If governments want grandma to live, they will have to send a trainload of free money to the utility to build a proper water treatment plant.

Fortunately there have been no repeats of Milwaukee in the US since 1993, but the problem of utilities refusing to take responsibility for the investment they need to make in order to protect their communities and the environment continues to grow around the world. The World Health Organization claims that 4,000 babies die every day as a result of poor water and sanitation. This blood is on the hands of those utilities who have failed to provide safe water and sanitation to their existing customers, or extend it to new ones.

In a normal business, companies would take the view that their customers might be prepared to pay a little bit extra in order to avoid dying, and that would provide the money for the investment required in order to stop it happening. In the water business, however, there is an assumption that customers are cheap and it is not their problem. A third party – the federal government, international donors, or whoever – should put up the money if they don’t like the death rate.

Changing the business model for water is what we are passionate about at Global Water Intelligence. Come and join us in Rome at the end of the month for the Global Water Summit to help make the difference (see www.watermeetsmoney.com for details).