United States
mental Protection
FUNDING WATER EFFICIENCY THROUGH
THE STATE REVOLVING FUND PROGRAMS
Introduction
Drought Conditions, July 2003
(www.drought.unl.edu/dm/monitor.html)
Total demand on the nation's public water supply systems nearly
tripled from 1950 to 1995. As potable water use has escalated, so has
the need to collect and treat an increasing volume of wastewater.
Recent water shortages across the United States have served to
remind states and water systems that water efficiency and reuse is
important for ensuring reliable and efficient services to customers.
When water demand is inflated by wasteful water use and water loss,
water systems and their customers spend more than necessary in
capital and operating costs. Water efficiency and reuse also are
important for meeting the environmental goals of many states and
communities. The number of water efficiency programs has increased
dramatically in the last 10 years, and these programs are now found in
almost every part of the United States. The Drinking Water State Revolving Fund (DWSRF) and Clean Water
State Revolving Fund (CWSRF) programs can be important sources of financial assistance to help states and
systems initiate a variety of efficiency measures and programs.
Why Use Water Efficiently?
1. Water efficiency saves money. Although some water efficiency strategies require an initial capital invest-
ment, in the long run, conserving water can provide significant cost savings for water and wastewater systems.
Water efficiency and reuse programs help systems avoid, downsize, and postpone expensive infrastructure
projects, such as developing new source water supplies, building new treatment capacity, and expanding pumping
and delivery infrastructure. When unneeded investments are avoided, systems have more resources for other
critical needs.
By installing more efficient
water fixtures and regularly
checking for leaks, households
can reduce per capita water use
from 74 to 52 gallons per day.
(www. aw wa .o rg/ad vocacy/l earn/conserve)
An effective way for water systems to realize significant savings is to
reduce unaccounted-for water. This is water that is produced, but
generates no revenue because it is lost before it gets to customers. By
reducing the water lost from leaks and stolen by unauthorized con-
nections (e.g., the tapping of hydrants), water systems can decrease
their costs and minimize the amount of water they must produce and
pump to meet demand. The first step in reducing unaccounted-for
water is quantifying it by measuring the amount of water consumed
by customers and the amount of water withdrawn from the source. These measurements require that the source
and service connections be metered. Metering also allows a system to base its fees on actual customer use, which
creates an incentive for customers to use water more efficiently.
Water efficiency initiatives can produce greater long-run savings by extending the useful life of a system's infra-
structure and lowering the cost of new investments. For instance, rather than build an oversized treatment plant,
a water system may save money by building a smaller scale plant and offering incentives for customers to retrofit
plumbing fixtures. The system benefits from increased treatment plant efficiency and reduced energy costs.
-------
On average, 50% to
70% of home water is
used outdoors for
watering lawns and
gardens. Inside,
toilets use the most
water, with an average
of 20 gallons per
person per da-
(www.awwa.org/advocacy/learn/conserve)
ROLES IN PROMOTING
2. Water efficiency helps water supplies withstand droughts. In recent
years, many communities' water supplies have been threatened by drought.
Some systems have implemented mandatory water efficiency measures to ensure
they can provide sufficient quantities of safe drinking water. Although drought
contingency plans are an important part of system planning, year-round water
efficiency programs can help communities and systems plan for true consumer
demands and reduce the need for more drastic policies during droughts. Im-
proved water efficiency can significantly reduce withdrawals from ground and
surface water supplies. Lower water demand may allow treatment facilities to
produce high quality finished water at a lower cost during the periods of low raw
water quality that often accompany a drought.
3. Water efficiency helps protect the environment. Reducing water waste and consumption decreases the
need to impound streams and rivers, thus preserving aquatic systems as wildlife habitat. Efficiency helps sustain
aquifers for future generations while reducing pollution from saltwater intrusion. Water efficiency can also reduce
wastewater flows and energy consumption as well as reduce polluted runoff from excessive landscaping irrigation.
How can the SRF programs help systems use water more efficiently?
The CWSRF and DWSRF programs, which operate in every
state and Puerto Rico, work like banks. Federal and state
contributions are used to capitalize the programs. These
assets, in turn, are used to make low or no-interest loans for
important drinking water and water quality projects. The
DWSRF was established by the 1996 Safe Drinking Water
Act (SDWA) Amendments to provide loans to publicly and
privately owned public water systems for infrastructure
improvements needed to protect public health and ensure
compliance with the SDWA. As of June 30, 2002, the
DWSRF program had provided 2,500 loans for $5.1 billion
to water systems for eligible projects. States may set aside
up to 31 percent of their DWSRF grants to finance activi-
ties that encourage enhanced water system management
and performance, like helping to prevent contamination
problems through source water protection measures. Under
the loan fund and set-asides, state DWSRF programs can
provide financial assistance to initiate a variety of water
efficiency measures and programs.
The CWSRF program was established under the Clean
Water Act (CWA) of 1987 to provide loans for point source
(§212), nonpoint source (§319), and estuary (§320) projects.
As of June 30, 2002, the CWSRF program had provided
12,500 loans for $42.4 billion for water quality protection
The DWSRF program in Florida
is considering an interest rate
incentive for systems that
implement water efficiency
measures. Although the plan is not
yet finalized, Florida may award
systems a one-quarter point reduction
on their interest rate if they have a water
efficiency plan.
Florida uses its 2 percent DWSRF technical
assistance set-aside for a contract with the Florida
Rural Water Association (FRWA) to provide water
audits and leak detection. Florida is divided into
five water management districts. Each district
issues consumptive use permits, which limit the
amount of water a utility is allowed to withdraw
from any source. When a system requests an
increase in its allowable water use, the
management districts generally refer systems to
FRWA for a water audit and leak detection (if
necessary). Systems have saved money by
avoiding the treatment and pumping costs for water
that would have been lost.
-------
projects. The CWSRF funds approximately $3 to $4 billion
in water quality projects each year. Water efficiency and
reuse activities and projects may be considered point
sources if they are developed as a component of a waste-
water treatment works (§212 project). These types of
projects are eligible under the point source authority
because they address the ability of wastewater treatment
plants to meet the environmental goals of a community
with efficiency and at minimum cost. As required by the
CWA, §212 projects must be publicly owned to receive
CWSRF funds.
How does a water efficiency project get funded?
Project eligibility and available funding varies according to the priorities, policies, and laws of each state. States
develop annual Intended Use Plans (ILJPs) that describe how they will use funds in the SRF programs. Because
each state administers its SRF program differently, the necessary first step is to get the project or activity included
in a state's IUP. Potential assistance recipients should contact their state DWSRF or CWSRF representative.
The East Alamosa Water and
Sanitation District in Colorado
is using a CWSRF loan to
purchase and install publicly
owned water meters in its
distribution system. Metering
provides essential data for
charging fees based on actual
customer use. This approach
has been found to contribute
directly to water efficiency. The
water meters will reduce water
use by an estimated 3 million
gallons per year. The loan will
be repaid from wastewater user
charges.
The Colorado Department of Public Health (DPH) requires water
systems that provide over 2,000 acre feet of water per year to
implement a water efficiency plan before applying for DWSRF funding.
The DWSRF program also gives 5 bonus points to systems that have
water efficiency plans when ranking loan applications, which
encourages many small systems to develop plans. Systems submit
their plans to the Colorado Department of Natural Resources, which
then provides a list of approved systems to the DPH. The water
efficiency plans typically address irrigation, drought tolerance and
management, and measures to reduce lawn watering. The majority of
plans also include surcharges on water use.
-------
ROLES IN PROMOTING
How can systems harness the SRF programs to improve water efficiency?
The SRF programs are a powerful resource for systems to finance projects
that promote water efficiency and reuse. The SRF programs can make loans
for a wide variety of water efficiency projects, as shown below. Because
each state SRF program differs in its water efficiency incentives and require-
ments, systems should check with their state DWSRF or CWSRF representa-
tive for specific requirements.
WASHINGTON
Royal City, Washington, is
using a CWSRF loan to build a
new wastewater treatment
facility in which the reclaimed
water will be used to augment
irrigation water in the summer
and enhance local wetlands and
lakes in the winter. The loan will
be repaid from user charges.
f
Installing water meters.
The average American
household could save 20,000
gallons of water per year if it
installed an inexpensive low-
flow showerhead. Alow-flush
toilet could reduce their water
use by an ac/c/tf/oft^/34%.
(www.epa.gov/water/you/chap3.html)
Accurate water consumption measure-
ments are essential for detecting leaks
and for charging customers based on the amount of water they consume.
When customers are billed for the water that they actually use, they have a
monetary incentive to use water more efficiently. The DWSRF and CWSRF
programs can fund the installation of water meters.
Installing or retrofitting water-efficient devices.
Installing fixtures that save water or retrofitting older, inefficient fixtures with
water-saving devices can conserve a significant amount of water. The DWSRF
program can fund the installation or retrofit of water-efficient devices, such as
appliances and plumbing fixtures. The CWSRF program can fund plumbing
fixture retrofits or replacements in public buildings. In addition, the CWSRF
can pay for the use
of efficient land-
scape irrigation equipment for facilities that are publicly
owned (e.g., public parks and public golf courses).
San Diego, California, initiated a Public
Facilities Retrofit program in 1992. While
not funded from the CWSRF, this project
would be eligible for a CWSRF loan.
Seventy city-owned structures were
retrofitted with low-flush toilets (which
require 1.6 gallons or less per flush). The
water savings resulting from this project are
estimated to be almost 8.5 million gallons
per year. Since then, the city has retrofitted
290 additional public buildings.
7 In 1991, California initiated an
agricultural water efficiency program
using its CWSRF. State districts use
CWSRF loans to purchase irrigation
equipment that is then leased to
farmers so they can convert from
furrows/siphon tube irrigation to
\ sprinkler/gated pipe irrigation. By
\ changing irrigation methods,
\ farmers use less water and
^^ reduce subsurface drainage.
^L Approximately $45 million
^k has been loaned to
^. seven districts to
operate this program.
The districts pay
back the loan with
money collected from
leasing the equipment.
-------
KAN
The Kansas Department of
Health requires municipalities to
implement water efficiency plans
approved by either the Kansas
Water Office or the Division of
Water Resources in order to
receive funding from the DWSRF
program.
Funding incentive programs.
It is not uncommon for
water systeWs^o lose
more than 10% of total
water production due to
leaky distribution systems.
(AWWA, 19|2. Water Industry Database:
Utility Profile*. AWWA, Denver, CO.)
Incentives such as rebates, tax
breaks, vouchers, and conservation
rate structures can encourage cus-
tomers to conserve water. These
incentives can encourage water users
to install water-efficient equipment,
appliances, or plumbing fixtures, repair water leaks, or implement sound
landscaping practices. The DWSRF program can fund incentive programs
if the costs are included as part of a larger project (similar to planning and
design costs included as part of a loan). The CWSRF program can fund
incentive programs as a method of reducing municipal waste if the pro-
grams encourage wastewater service customers in the service area of the
proposed project to reduce wastewater flow to the project.
Installing dual pipe distribution
systems.
Some of the water that systems provide to
customers does not need to meet National
Primary Drinking Water Regulations
(NPDWRs) because it is used for non-potable
purposes such as landscape irrigation and fire
protection. A parallel distribution network
(potable and non-potable) allows a public
water system to treat less water to potable
standards, saving both water and money.
Treated wastewater (i.e., reclaimed water) is
provided to homeowners and industrial users
for non-potable purposes through the parallel
distribution system. The use of treated
wastewater for non-potable purposes reduces
source withdrawals and eliminates the need
for the public water system to expand its
facility. The DWSRF can pay for the installa-
tion of a dual pipe distribution system as a
means of lowering costs of treating water to
potable standards. The CWSRF can pay for
recycling gray water in public buildings,
reusing wastewater for public purposes, and
stormwater treatment and reuse. Systems
should consider combining drinking water and
wastewater projects to save water and money
by promoting efficiency.
The Pennsylvania Water (
Conservation Leak \ )
Detection Program, \
funded by the state's 2 \ /
percent DWSRF \
technical assistance \
set-aside and matching
state funds, is a joint
effort of the Pennsylvania Department of Environmental
Protection and the Pennsylvania Rural Water Association
(PRWA). PRWA uses set-aside funds to provide two circuit
riders to conduct water audits and perform leak detection for
small systems (serving fewer than 10,000 persons). The
PRWA, which is familiar with systems in the state that have
high levels of unaccounted-for water, targets small systems for
participation. Systems may request water audits as well.
Before the Water Conservation Leak Detection Program began,
only systems that were members of PWRA were eligible for
water audits. Now any small system can participate.
Since the program began in 1998,86 systems have
participated. Despite the time-consuming nature of the
project, the circuit riders have detected 594 leaks and saved
over 1.4 billion gallons of water and $1.36 million annually.
From June 2001 to July 2002,24 systems underwent water
audits. A total of 152 leaks were detected, which saved
systems over 396 million gallons of water and $152,800
annually. Individual systems are saving an average of $6,900
per year by reducing average lost water from 36 percent to 9
percent. These savings may seem small, but they are
significant for small systems on tight budgets.
-------
LES IN PROMOTING
How can states use the SRF programs to promote water efficiency?
ERMONT
The Vermont
Department of
Environmental
Conservation uses
its 2 percent
DWSRF technical
assistance set-
aside to fund a
circuit rider from the
Northeast Rural
Water Association (NeRWA) to conduct
water audits and leak detection.
Systems generally ask to participate in
the program, though they may also be
targeted based on sanitary survey
results. The program is very
successful—often coming to the
rescue of systems that have a major
leak which they are unable to find.
The power of educating
the public should not be
underestimated. Cus-
tomers are a key part of
any water efficiency
effort and should be
included through public
education and outreach.
The savings created by
reducing wasted water
can be passed along to
customers, who them-
selves can be empow-
ered to save money on
their utility bills by using water efficiently.
In the DWSRF program, states can use their set-aside funds to promote
water efficiency through the following activities:
Development of water efficiency plans.
Provision of technical assistance (e.g., water audits, leak detection, and rate structure consultation) to help
systems conserve water.
Implementation of drought monitoring.
Development and implementation of incentive programs or public education programs on efficiency.
Development and implementation of ordinances or regulations to conserve water.
The Nebraska Public Water Supply Program uses the
DWSRF in several ways to encourage water efficiency. To
receive DWSRF funding in Nebraska, a system must have
metered connections or include meter installation in the
proposed project. Disadvantaged systems are eligible
for additional financial assistance if they have average
metered water use of less than 100 gallons per person
per day. A portion of the 2 percent DWSRF technical
assistance set-aside is used for a contract with the
Nebraska Rural Water Association to assess the
infrastructure of systems serving 10,000 or fewer
persons. These assessments include leak detection.
icti y i
Department of
the Environment
(MDE) is
proposing a new
priority ranking process for systems applying for
DWSRF funding. The current scoring system gives
points for public health, compliance, and
environmental and system reliability. The proposed
water efficiency bonus points would increase the
total number of available points from 100 to 110. A
system would receive 5 points for completing a
water audit within the past year and 5 points for
implementing Best Management Practices (BMPs)
for water efficiency. MDE already has written
guidance on water efficiency BMPs.
-------
The SDWA gives states the option of requiring systems
to submit water efficiency plans as a condition of
receiving DWSRF assistance (SDWA §1455). States
have also chosen to award bonus points in their priority
rankings to systems that have water efficiency plans or
that implement water efficiency measures. Systems
should check with their state DWSRF representative to
find the specific requirements or incentives for their
state. EPA guidelines for developing a water efficiency
plan can be found on the EPA website, ttmw.epa.gpvI
The guidelines include a variety of
planning steps and recommendations for water effi-
ciency measures, each geared to different system sizes
and different water efficiency needs and goals.
In the CWSRF program, states can fund the following activities as §212 treatment works projects:
I Use of ordinances or regulations to conserve water use.
I Development and implementation of public education programs on efficiency.
The Texas Water
Resources Board
requires all systems
applying for a DWSRF loan
greater than $500,000 to submit a
water efficiency plan and a drought
management plan. The Texas Water
Conservation Group receives the plans
from systems, reviews them, and returns
them to systems with comments. The Conservation Group
notifies the DWSRF program when the plans are acceptable.
Even when a loan is approved, however, the DWSRF program
will not transfer funds to the system until the system submits
documentation that the water efficiency and drought
management plans have been implemented.
Houston, Texas, has
implemented a water
efficiency education program
as part of a comprehensive
plan to reduce water use.
The city's program has saved
$3.70 for every $1.00
invested in water efficiency.
The education program
promotes retrofitting of older
structures with efficient
fixtures. It works through city
schools, a T-shirt design
contest, a display used at
festivals and meetings, and a
public speaking program.
Although not funded from the
CWSRF, these types of
activities would be eligible for
funding.
-------
What other federal resources are available for water efficiency?
United States Bureau of Reclamation WCFSP
The United States Bureau of Reclamation (USER) created the Water Conservation Field Services Program
(WCFSP) in 1997 to encourage water conservation, assist water agencies in developing efficiency plans, and
provide information about water use and management. Among the water efficiency services provided by the
WCFSP are:
V Conducting field tours.
V Distributing information guides and materials.
v Teaching workshops and an annual water management seminar.
J Providing on-the-ground educational services for general and
specific activities.
Brokering partnerships with governmental, state, and local
educational organizations.
v Participating in water fairs and other children's education activi-
ties.
Establishing and supporting Water Conservation Information
Centers.
In addition, the USER provides for implementation of water efficiency
measures to water systems through cost-sharing activities. For more
information, see www. usbr.gov I water share.
Maui, Hawaii, used CWSRF funding to
upgrade the filtration, disinfection, and
ancillary facilities at the Kihei
wastewater treatment plant to produce
a consistently high-quality effluent.
The reclaimed water is used to help
meet the needs of golf courses, resort
areas, county parks, community
centers, and schools affecting 1,200
acres. The loan will be repaid from the
city's general fund.
Rural Utilities Service WEP
The Rural Utilities Service (RUS) created the Water and Environmental Programs (WEP) which provides loans,
grants, and loan guarantees for drinking water and wastewater facilities in rural areas and in cities and towns of
10,000 or fewer residents. Public bodies, non-profit organizations, and recognized Indian Tribes may qualify for
assistance. RUS also funds technical assistance and training to aid rural communities and may be able to assist in
planning or funding water efficiency measures. For more information, see www. us da.gov I rusl water I.
FOR MORE INFORMATION...
DWSRF Website: Water Efficiency Website:
www.epa.gov/safewater/dwsrf.html www.epa.gov/OWM/watei
Office of Water (4606M)
CWSRF Website:
www.epa.gov/OW-OWM.html/
cwfmance/cwsrf/
Office of Ground Water and Drinking Water: EPA 816-F-03-022
www.epa.gov/safewater/
Office of Wastewater Management:
www.epa.eov/OWM/
August 2003
Printed on Recycled Paper
------- |