Water executive predicts US infrastructure spending will grow

Water and wastewater project spending in the United States will probably grow 10 to 15% this year and at a slightly slower pace in 2002, according to a top executive at CH2M Hill, one of the US’s largest civil engineering firms.

Speaking at the 93rd annual meeting of the Water and Wastewater Equipment Manufacturers Association (WWEMA) Friday, 9 November, CH2M Hill Vice President Thomas E Decker reported that water and wastewater construction spending grew 16 to 17% during the first eight months of 2001 over the same period of the previous year and predicted that the growth will slow slightly during the final months of the year.

“The year 2002 is almost anybody’s guess,” said Decker, who is the manager of CH2M Hill’s Water Business Group. “A likely scenario is high single-digit growth.” Water supply and wastewater treatment spending in the year 2000 grew about 10% over 1999, he said.

Described by one WWEMA official as a “leading futurist in the water and wastewater industry”, Decker predicted that water and wastewater project spending may go into a decline during the next year and a half because it tends to lag contractions in the general economy by 12 to 18 months. However, he said the industry may “dodge the bullet” during this recession because he expects the economy to bounce back quickly and a short recession in the general economy may fail to trigger a decline in spending by local water and sewer service providers.

The water and wastewater construction and new equipment business in the United States is worth about a $30 billion industry, according to material presented by Decker, with about $19 billion spent on construction, $8 billion on new equipment and $3 billion on engineering. Americans spend about $100 billion annually on water and wastewater construction, equipment and services, of which about $60 billion is in user fees and taxes.

Spurring demand for new water and wastewater spending is population expansion both in the United States and worldwide, new regulations, demand to improve environmental conditions, the likelihood of increased federal spending, and so-called ‘nontraditional’ projects, such as energy production water and wastewater treatment, upgrading systems on military bases and ‘giant’ projects like the Everglades cleanup (see related story) and CALFED – protecting California’s Bay-Delta system.

Decker said there has been a trend toward equalized spending on water and wastewater projects. Historically, 60% of new construction spending has been on wastewater projects, he said, primarily because of a regulatory emphasis focused on treating used water before returning it to the environment.

More recently, however, he said government funding and regulations have been aimed at drinking water quality, spurring spending on water treatment and distribution projects. Now, he said, about 55% of new construction is for wastewater projects and 45% for new water systems. “Water is still the kid brother to wastewater, but it is closing the gap,” he said.

New water supply spending in the United States, he said, will be:

  • 45% by large utilities – those with more than 50,000 customers;
  • 32% by medium sized utilities – those with 3,300 to 50,000 customers;
  • 23% by small utilities – those with less than 3,300 customers;
  • 55% will be for distribution systems;
  • 25% for treatment;
  • 12% for storage;
  • 6% for sourcing; and
  • 2% for other projects.

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