Drinking Water Costs
                                  & Federal Funding
                                                                            EPA810-F-99-014
                                                                            December 1999
 SAFE DRINKING WATER ACT • CELEBRATING 25 YEARS • PROTECT OUR HEALTH FROM SOURCE TO TAP
How Much Does It Cost to Treat and
Deliver My Drinking Water?
We generally pay much less for our drinking
water than we do for most other goods and
services, such as cable television, telephone
service, and electricity. On average, tap water
costs are slightly more than $2 per  1,000
gallons, although the costs tend to be lower for
large water systems, and higher for small
systems. Treatment accounts for about 15
percent of that cost. Other costs are for equip-
ment (such  as the treatment plants and distribu-'
tion systems), and labor for operation and
maintenance of the system. Yet think about how
important water is to our daily lives. Each of
us, on average,  uses over 100 gallons of water
per day for  everything from drinking and bath-
ing to watering our gardens.  This equates to
an average  annual water bill of about $300 per
household,  though  costs vary considerably
across the country.

Funding for Drinking Water Programs
Federal and state governments share responsibil-
ity for administering and funding drinking water
programs. Under the Safe Drinking Water Act
(SDWA), the U.S. Environmental Protection
Agency (USEPA) is given the responsibility for
developing  national standards and regulations
that apply to the nation's public drinking water
systems and enforcing those standards.  USEPA
has a national headquarters and 10 regional
offices that work together and with the states to
administer drinking  water programs.

SDWA also allows states to accept oversight of
the drinking water program under an agreement
with USEPA giving states primary enforcement
(or primacy) responsibilities. All states currently
have primacy (Wyoming and the District of
Columbia do not have primacy so their drinking
water programs are  administered directly by
USEPA Region VIII in Denver, and Region III in
Philadelphia, respectively).  USEPA also adminis-
ters all tribal drinking water programs at this
time.  In addition to this delegation of federal
authority to the states, states also have the power
to create additional regulations and programs
governing drinking water suppliers through their
own legislative and regulatory processes.

These federal and state programs are  separate
from the activities performed by water systems.
State and federal programs develop regulations
and perform oversight and compliance activities,
but do not actually treat or deliver water to
customers.  At the local level, public  and private
water utilities collect, treat, and deliver drinking
water to consumers.  Funding for the  construc-
tion, maintenance, and operations of these local
utilities is usually derived from water bills and/or
local taxes.

Funding for the federal drinking water program
is determined by the President and Congress.
Funding for state programs comes from the
federal government,  state general revenue
funds, state fee programs, and other  sources of
state funding.  Each year, Congress allocates
Public Water System Supervision Grants to the
49 states with primacy as well as Indian Tribes.
States are required.to match their grants by 25
percent. State general  revenues and  fees pro-
vide the majority of operational funding for state
drinking water programs. Historically, states  on
average have contributed around 65  percent of
the costs of running the federal drinking water
program while the federal government has
contributed 35 percent.

Beginning in 1976 USEPA began  providing
grants to states in order to assist in implementa-
tion of both the Underground Injection Control
(UIC) and Public Water System Supervision
(PWSS) programs. In 1976 the amounts set-aside
for UIC and PWSS were $2.5 million  and $7.5
million, respectively. In 1999, the amounts have

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grown to $10.5 million and $90 million (however the
UIC grants have been essentially flat since 1988).

Funding for Drinking Water Infrastructure
and Maintenance
The cost of making water safe continues to rise.  Much
of the existing drinking water infrastructure (under-
ground networks of pipes, treatment plants, and other
facilities) was built many years ago. The USEPA
Drinking Water Infrastructure Needs Survey, released
in 1997, estimated that drinking water systems will
need to invest $138.4 billion over a 20-year period to
ensure the continued source development, storage,
treatment, and distribution  of safe drinking water.
Many agree this is a very conservative low estimate.

The federal government has a number of programs that
support the construction and maintenance of drinking
water systems. The largest program, the Drinking
Water State Revolving Loan Fund (DWSRF), was
created by the 1996 amendments to SDWA.  This
program provides federal grants from USEPA to states.
They, in turn, loan money to drinking water systems to
install, improve, or maintain treatment facilities.
Tribes, U.S. territories, and the District of Columbia
receive direct grants for drinking water infrastructure
improvements from  USEPA.

The first grants from the DWSRF were distributed to
states, tribes, and territories from the 1997 appropria-
tion and totaled $1.275 billion. States are required to
provide a 20 percent match for these funds. The
majority of funds received by state DWSRF programs
are  loaned to water systems to fund projects to im-
prove the quality of the water they deliver to their
customers. Each year, a state may "set-aside" a per-
centage of the funding (up to 31 percent in fiscal year
1997) to fund components of the state's drinking water
program. These set-asides can include administration
of the fund, technical assistance to small systems, and
other state programs such as source water protection
and operator certification. Each state decides what
percentage of set-asides to use and how to use them
based on public input and participation. State set-
asides comprised $243 million out a total $1.255
billion provided to states from the fiscal year 1997
appropriation.

There are also national set-asides, which target funds
from the overall DWSRF appropriation to address
specific purposes. During fiscal years 1997 - 2000,
these set-asides will fund projects for Indian Tribes and
Alaska Native Villages, unregulated contaminant
monitoring, and reimbursement of operator certifica-
tion training expenses.

Funding for drinking water systems is also available
through the U.S. Department of Housing and Urban
Development's Community Development Block
Grants, bonds, and the Rural Utility Service of the U.S.
Department of Agriculture which provides funds for
rural drinking water and waste water systems.

For  More Information
For more information, contact the Safe Drinking Water
Hotline at 1-800-426-4791, or visit USEPA's web site
at http://www.epa.gov/safewater/. USEPA also has a
special web site for the SDWA 25th Anniversary,
located at http://wwv.epa.gov/safewater/sdwa25/.
This  site links to the web sites of the many partner
organizations observing SDWA's 25th anniversary.

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