The IIJA is a Huge Opportunity – Especially if Used Strategically

How utilities can think strategically about how best to leverage their IIJA dollars

The Infrastructure Investment and Jobs Act (IIJA) presents a tremendous opportunity to improve our nation’s water and wastewater systems. Over the next five years, the IIJA will commit $55 billion to EPA-administered projects – in addition to billions more for water-related projects for Tribal Nations and the Bureau of Reclamation. Among the critical priorities the IIJA will address are lead service lines, PFAS and emerging contaminants, and water infrastructure for disadvantaged communities.

Overall Infrastructure Needs, Inflation, and “The Great Reshuffle”

Although the IIJA is a great start, it is not enough to address the entirety of our infrastructure needs. In 2020, the American Society of Civil Engineers (ASCE) estimated that the overall investment gap in water and wastewater infrastructure would grow to $434 billion by 2029, or roughly eight times what the IIJA is scheduled to provide.   

In addition, recent inflation will only increase the gap between infrastructure needs and funding. As of April 2022, the Consumer Price Index rose 8.3% over the preceding 12 months, according to the US Bureau of Labor Statistics. Inflation in the utilities sector mirrors inflation elsewhere in the economy, as post-pandemic demand for things like construction materials, equipment, and technologies has outpaced supply.   

This shortfall in these supplies has coincided with a labor shortage across our economy, as many workers have resigned, retired, or relocated in what one analyst – Stephanie Ferguson of the US Chamber of Commerce – called “The Great Reshuffle.”   

Applying the IIJA Funds Strategically

Given these factors – the still-growing gap between infrastructure funding and need, and the rising costs of goods and labor – it only makes sense that utilities think strategically about how best to leverage their IIJA dollars. One way to do this is for utilities to address multiple needs in fewer, larger projects to take advantage of economies of scale and make their own projects more attractive to bidding contractors, who will have many projects from which to choose.  

Making Comprehensive Improvements – a Lead Service Line (LSL) Example

One example of how utilities can leverage IIJA dollars is around lead service line (LSL) replacements. Addressing lead service lines is the single highest water-related priority of the IIJA. But replacing LSLs is a time-consuming, disruptive, and expensive endeavor – as contractors must go yard-to-yard with excavation equipment and personnel. A 2019 study by the New York Department of Health estimated the cost of a single LSL replacement between $5,000 and $10,000.  

As utilities form projects to replace LSLs, it makes sense for them to address other infrastructure needs in the same project. One example of this is if the utility has had issues with non-revenue water, main breaks, or providing their consumers with accurate and timely data. Upgrading their metering, monitoring, and analytic capabilities would only add incrementally to the overall project cost – but would serve to modernize whole sections of water infrastructure. Replacing lead services lines would be a vital task – and could also be just the start of a modernized, digitized water system.    

A Generational Opportunity 

The IIJA presents a generational opportunity to transform our nation’s water infrastructure. Its billions of dollars will help us solve some of our most pressing water challenges, like lead service lines and infrastructure for disadvantaged communities.   

But given the magnitude of our infrastructure challenges and inflation, the IIJA cannot address all our shortcomings. By constructing fewer, larger projects to address multiple needs, utilities can truly make the IIJA the transformational, once-in-a-generation funding package it is poised to be.