The U.S. EPA maintains an official database of all public drinking water systems using information collected and submitted by the states: Safe Drinking Water Information
System/Federal (SDWIS/Fed) (USEPA, 2001a). Based on the most current SDWIS/Fed data, there are approximately 161,000 public drinking water systems in the United States, which are defined as: “systems for the provision to the public of water for human consumption through pipes or, after August 5, 1998, other constructed conveyances, if such a system has at least fifteen service connections or regularly serves an average of at least twenty-five individuals daily at least 60 days out of the year” (40 CFR Part 141, 2004, Section 141.2).
Public water systems are often divided into three types for purposes of describing their characteristics (40 CFR Part 141, 2004, Section 141.2):
• Community Water System: A public water system that serves at least 15 service connections used by year-round residents or regularly serves at least 25 year-round residents.
• Non-Transient Non-Community Water System: A public water system that is not a community water system and that regularly serves at least 25 of the same persons over six months per year. Some examples are schools, factories, office buildings, and
hospitals which have their own water systems.
• Transient Non-Community Water System: A public water system that is not a community water system and that does not regularly serve at least 25 of the same persons over six months per year. Examples are a gas station or campground where people do not remain for long periods of time.
Exhibit 3-2 shows the approximately 161,000 systems by type, size, and number of people served. As shown in the exhibit, community water systems serve a population of more than 273 million.5 The approximately 3,900 large and very large community water systems (those serving more than 10,000 people) serve a total of about 221 million. Most people in the U.S. receive their water from these large community systems.
Exhibit 3-3 shows the number of systems and people served by water source. As shown in the exhibit, most people served by community water systems get their water from surface water sources (68 percent). However, about 75 percent of the 53,000 community water systems have groundwater as their sole or principal source.
To support the Agency’s regulatory development and implementation efforts, EPA periodically conducts a survey of community water systems (USEPA, 2002a). The most recent survey, conducted in 2000, received responses from 1,246 system operators covering the full range of sizes in terms of populations served (USEPA, 2002a, p. 3). The data collected in the survey apply only to community water systems, and do not include the non-community systems (transient and non-transient). The survey results include the following:
• The overwhelming majority of large community water systems are publicly owned (USEPA, 2002a, Table 3). About 85 percent of the systems serving more than 10,000
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The total populations served listed in Exhibit 3-2 and Exhibit 3-3 sum to more than the total national population. This occurs for two reasons. Some people are served part of the year by transient systems (such as camp grounds) as well as by the community water system at their place of residence. These people are consequently counted twice. Also, the population served includes those served directly (i.e., retail water customers) as well as those served through the sale of water to other public water suppliers (i.e., wholesale customers) (USEPA, 2002a, p. 3). The inclusion of wholesale customers also contributes to double counting.
people are publicly owned, and about 91 percent of systems serving more than 100,000 people are publicly owned. Overall, however, the number of systems is split evenly between public and private ownership: 51 percent are privately owned and 49 percent are publicly owned (USEPA, 2002a, p. 8).
• Of the 51 percent of the systems that are privately owned, 27 percent are for-profit and 34 percent are not-for-profit (USEPA, 2002a, p. 8). The remaining 39 percent of the private systems are ancillary, meaning the water supply is not the primary purpose of the business, such as a mobile home park which has its own water system. These systems tend to serve small populations and often do not bill customers for water (USEPA, 2002a, p. 8-9).
• More than 90 percent of the total water produced is controlled by publicly owned systems (USEPA, 2002a, p. 10).
• In 2000, residential customers accounted for two-thirds of retail water deliveries, while commercial, industrial, agricultural, and other non-residential customers account for the balance. The average residential connection (which is typically a residential household) received about 325 gallons per day, while the average non-residential customer received nearly 1,700 gallons per day (USEPA, 2002a, p. 10).
• Fifty percent of the water produced comes from surface sources, 30 percent comes from the ground and 20 percent of the water is purchased from other entities following
treatment (USEPA, 2002a, p. 8).
Exhibit 3-2: Water Systems by Number of People Served
System Size by Population Served
Water System Type
Very Small 500 or less Small 501-3,300 Medium 3,301- 10,000 Large 10,001- 100,000 Very Large >100,000 Total # systems 30,417 14,394 4,686 3,505 361 53,363 Pop. Served 5,010,834 20,261,508 27,201,137 98,706,485 122,149,436 273,329,400 % of systems 57% 27% 9% 7% 1% 100% Community Water Systems % of pop 2% 7% 10% 36% 44% 100% # systems 16,785 2,786 97 16 2 19,686 Pop. Served 2,327,575 2,772,334 506,124 412,463 279,846 6,298,342 % of systems 85% 14% 0% 0% 0% 100% Non-Transient Non-Community Water Systems % of pop 37% 44% 8% 7% 4% 100% # systems 85,366 2,657 96 29 4 88,152 Pop. Served 7,315,647 2,602,706 528,624 619,248 12,269,000 23,335,225 % of systems 97% 3% 0% 0% 0% 100% Transient Non- Community Water Systems % of pop 31% 11% 2% 3% 53% 100%
Total Number of Systems 132,568 19,837 4,879 3,550 367 161,201
See text for definitions of the water system types. Source: USEPA (2004b).
Exhibit 3-3: Water Systems by Water Source
System by Water Source
Water System Type Groundwater Surface Water Total
# systems 41,499 11,864 53,363 Pop. served 86,348,074 186,981,326 273,329,400 % of systems 78% 22% 100% Community Water Systems % of pop 32% 68% 100% # systems 18,908 778 19,686 Pop. served 5,568,192 730,150 6,298,342 % of systems 96% 4% 100% Non-Transient Non-Community Water Systems % of pop 87% 12% 100% # systems 86,061 2,091 88,152 Pop. served 10,527,089 12,808,136 23,335,225 % of systems 98% 2% 100% Transient Non- Community Water Systems % of pop 45% 55% 100%
Total Number of Systems 146,468 14,733 161,201
Groundwater systems = groundwater and purchased groundwater.
Surface water systems = surface water, purchased surface water, groundwater under the direct influence of surface water, and purchased groundwater under the direct influence of surface water. Source: USEPA (2004b).
The majority of the revenue earned by community water systems comes from water sales, which in 2000 accounted for $33 billion, or 85 percent of total water system revenues of $39 billion (USEPA, 2002a, pp. 15-16). Water is typically sold on the basis of the amount of water used. Other sources of revenue, which are typically not based on consumption, include: development fees, connection fees, fines and other payments. Residential customers provided the majority of water sales revenue across systems of all sizes (USEPA, 2002a, p. 16). Exhibit 3-4 presents the distribution of revenue sources, along with the distribution of water sales revenue by customer type.
As of 2000, the annual revenue for all water systems exceeded their annual expenses of $32.2 billion. Nevertheless, in 2000 about 30 to 40 percent of water systems reported operating deficits (USEPA, 2002a, p. iv), with smaller systems tending to be more likely to be operating with deficits or losses (USEPA, 2002a, p. 37).
Expenses incurred by water systems are divided into three types:
• operations and maintenance (O&M) accounts for 70 percent of expenditures; • interest and repayment of debt equals 20 percent; and
• non-routine expenses, including capital investments make up 10 percent.
For O&M, an average of 38 percent of the budget is for employee costs, with the remaining required for other operational requirements. However, as systems become larger, O&M accounts for a smaller portion of the budget (USEPA, 2002a, p. 17-18).
Capital spending by community water systems is currently averaging about $10 billion annually. Almost half of this sum is spent on the replacement and upkeep of distribution and transmission lines or pipes. Projects involving treatment accounted for about 20 percent of this spending.
Exhibit 3-5 details the areas where capital spending is focused for both public and privately owned community water systems (USEPA, 2002a, p. 19).
Several studies have examined whether a quantifiable gap exists between projected drinking water investment needs and available resources. EPA estimated needs expected over the twenty year period of 2000 to 2019 and found that a significant funding gap could develop if the current level of spending does not increase at a real rate of growth of 3 percent each year (above the rate of inflation) (USEPA, 2002a, p. ES-1). This real increase in expenditures is estimated to be needed for several reasons:
• Systems are aging: Pipes often have life cycles that last upwards of 50 to 100 years, but aging pipes require increasing amounts of maintenance and (eventually) replacement. • Population shifts and increases: Water systems will need to increase capacity to handle
increases in the U.S. population (expected to be 325 million by 2020), as well as continued migration to certain areas of the country, such as the southwest. Recent trends show a stable level of per capita use of public water supply, indicating that population growth will lead to increased water use (USGS, 2004, p. 40).
• Current treatment may not be sufficient: New treatment requirements have been
proposed that will require additional investment. Deterioration of intake water quality may also contribute to increased treatment needs.
Based on the 1999 Drinking Water Infrastructure Needs Survey, the capital investment needed was estimated at $150.9 billion over 20 years, including $78.7 billion for transmission and distribution pipelines and related infrastructure, $63 billion for treatment systems, storage systems, and water supplies, and $9.3 billion to comply with future regulations (USEPA, 2002c, p. 30). This assessment was adjusted upward to $209.3 billion to account for under-reporting of needs by survey respondents (USEPA, 2002c, p. 30).6 Converting the estimates from 1999 dollars to 2001 dollars yields $218 billion.
Exhibit 3-4: Revenue by Source and Water Sales Revenue by Customer Type
Water Sales Revenue by Customer Type Residential 87.4% Wholesale 2.3% Non- Residential 10.2% Revenue by Source Water Related Operations 3.2% General Fund 0.5% Other Sources 4.2% Water Sales 92.0% Source: USEPA (2002b), Table 51 and Table 52.
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Adjusted figures are: $115.6 billion for transmission and distribution pipelines and related infrastructure, $84.4 billion for treatment systems, storage systems, and water supplies, and $9.3 billion to comply with future regulations (1999 dollars) (USEPA, 2002c, p. 31).
Exhibit 3-5: Type of Capital Expense by Ownership Dist/Trans 54% Treatment 16% Storage 8% Land 1% Source 9% Other 12% Privately Owned Systems Dist/Trans 48% Treatment 23% Storage 12% Land 2% Source 8% Other 7% Publicly Owned Systems Source: USEPA (2002b), p. 19.
AWWA’s May 2001 study of investment needs also estimated significant resource requirements, totaling $250 billion over the next 30 years for pipe replacement and system expansion (AWWA, 2001). The Congressional Budget Office (CBO, 2002) conducted an independent estimate of investment needs and compared the figures to previously published values. Because the CBO analysis examined expected costs as financed, as opposed to total capital costs, the figures are not comparable to those presented here. However, the study concludes that investment
requirements in the period of 2000 to 2019 may average $11.6 billion to $20.1 billion per year (CBO, 2002, p. ix). It further states that the higher figure represents an increase of nearly $10 billion in annual expenditure above the 1999 level.
Based on these assessments, water supply systems are expected to continue to be under financial pressure to increase capacity, comply with water quality requirements, and keep rates as low as possible.