Water Infrastructure Update

| March 01, 2019
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According to the research team at Water Asset Management

The American Society of Civil Engineers (ASCE) 2017 report card gave the country’s water and waste water systems a D. A large portion of the nation’s drinking water infrastructure is nearing the end of its useful life with an estimated 240,000 water main breaks per year. Some water systems date back to the mid-1800s with most water infrastructure components having a useful life of between 15 and 100 years. It is estimated that the most urgent investments to restore water infrastructure could be spread over 25 years at a cumulative cost of approximately $1 trillion.

Wastewater infrastructure faces the same hurdles with between 700,000 and 800,000 miles of public sewer lines in the U.S., many installed in the early 1900s. More than 56mm additional customers will be added to centralized water treatment systems over the next 20 years. Investments in these pipes account for 85% of dollars spent in the sector with still an estimated 900 billion gallons of untreated sewage discharged each year.

In addition to infrastructure costs, water managers throughout the Western United States are facing unprecedented uncertainty of their water supplies, and states are realizing the strategic importance of long-term water supply diversification and are seeking to ensure adequate future water supply for increasing populations, energy production and other growth areas. As the marginal cost of new water supplies increases (desalination, reuse, transportation, etc.), so will the value of regional water supplies and storage.

Providing dynamic low cost, high volume solutions to Western water scarcity problems requires institutional capital and expertise. As more institutional capital and managers enter the sector, deal flow and transaction sizes will likely increase. To-date potential returns have not yet begun to contract as the knowledge and execution skills needed to succeed in the water resource area require local relationships and execution experience.

Stay Tuned, Disciplined & Patient! {TJM}

The Investor & Character Equation (ICE) | S + R = O

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