Sustainability | A sustained effort
Ageing infrastructure and climate-related impacts are further encouraging an industry-wide focus on sustainability
Above: Discussions at COP26 focused on sustainable hydropower. Here Chief Executive of the International Hydropower Association Eddie Rich is in conversation with former Australian Prime Minister Malcolm Turnbull; Iceland’s Minister of Tourism, Industry and Innovation Þórdís Kolbrún Reykfjörð Gylfadóttir; and The Nature Conservancy’s Regional Managing Director for Europe Marianne Kleiberg
THE US WATER INDUSTRY has faced unique challenges over the past year, and it hasn’t just been the Covid-19 pandemic that has made its impact, according to a new report published in August 2021 by Black and Veatch. Ageing infrastructure and climate-related impacts have also prompted the industry to respond by embracing sustainability, innovation and technology. Writing in The Strategic Directions 2021 Water Report, President of Black & Veatch’s water business Cindy Wallis-Lage, said: “With thousands of water utilities across the US, challenges run deep. Ageing infrastructure remains the chief issue, prompting concerns about the resiliency of assets well past their prime. Climate change worries are driving difficult discussions about hardening the infrastructure – and how to pay for it – to withstand droughts, floods, wildfires or extreme shocks, such as February’s deep freeze in Texas.” Wallis-Lage said that the COVID-19 pandemic,
Above: Wildfire is one of the climate hazards utilities may face over the next 30 years
initiated in early 2020 and continuing in 2021, created financial stress on many utilities and complicated existing industry challenges. In addition, “intensifying natural disasters impacted water systems, highlighting the rising effects of climate change, testing the resilience of infrastructures, and reinforcing the need for significant investment”. The report goes on to discuss how utilities and communities face an evolving challenge to protect against weather-related disasters that appear to be gaining in terms of frequency and intensity as a result of climate changes. By beginning or advancing the planning process for operational resilience in the near term, it says that utilities can help to provide water security in the future. In the report, Black and Veatch’s Ed Rectenwald (a
hydrogeology national practice lead), Jim Schlaman (director of planning and water resources) and Andrew Smith (national watershed, stormwater and flood management practice lead) state that the water industry has “tended to give thoughts of climate change a relatively cold shoulder” given their other demands.
“As impacts of climate change manifest themselves elsewhere in the form of expansive, seemingly more
16 | December 2021 |
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common droughts, flooding, hurricanes and wildfires, questions arise,” the authors wrote. “Are utilities and communities doing enough to harden their water, wastewater and stormwater infrastructures and assets against such threats? Or are they at least starting to plan for such upgrades in the interest of dependable water security and supply? The short answer is that there’s much more the industry needs to be doing to become resilient.” They continue to add that “increasingly extreme weather events should compel water utilities — many underfunded and starved for capital — to proactively and thoughtfully plan for ways to harden their assets as a backstop”.
Although the US built a lot of water and wastewater infrastructure in the 1950s and 1960s, capital spending since has since dropped off sharply. “Until systems break, water and wastewater functions remain an ‘out of sight, out of mind’ business. But breakdowns are becoming more frequent, given the prevalence of ageing infrastructure stressed by population growth and migration,” the authors warn. As worries about climate change escalate
Rectenwald et al recommend that utilities of all sizes would be “well-served” to strategise thoughtfully now about upgrades, knowing that such projects are years in the making. They go on to suggest that water utilities should begin by having earnest, honest conversations about the value of water and remember the salient point that the environment is not static. “It’s not about the infrastructure’s performance over past decades but what challenges the assets will have to handle sooner or later,” they stressed. “It’s far cheaper to repair or replace assets now, before systems weaken and fail, than playing catchup – and pointing fingers– when trouble strikes.”
Climate risk exposure
New analysis by S&P Global Ratings has also highlighted US utilities’ exposure to physical climate risks, concluding that these will become markedly more acute by 2050. Published in September 2021, Keeping the Lights On: US Utilities’ Exposure to Physical Climate Risks found that wildfires, storms and water stress are the most material climate hazards facing 24 rated investor- owned US utilities in the next 30 years. The report warns that the risks of acute, extreme weather events are rising. Five of the country’s worst natural disasters have all occurred since 2005, totalling US$523 billion in inflation-adjusted damage. While in most cases, acute risks prove manageable and are supported by recovery mechanisms to allow utilities to recuperate related costs, extreme events do have an effect on credit quality. In particular, transmission lines for utilities on the West Coast present a concentrated risk given extensive wildfire exposure. Indeed,
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