\
~
S, ^
Drinking Water Costs
& Federal Funding
SAFE DRINKING WATER ACT • 1974-2004 • 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 1 5 percent of that cost.
Other costs are for equipment (such as the treatment
plants and distribution 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 1 00 gallons
of water per day
for everything
from drinking and
bathing 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 responsibility for
administering and funding drinking water programs.
Under the Safe Drinking Water Act (SDWA), the U.S.
Environmental Protection Agency (US EPA) is given the
responsibility for developing national standards and
regulations that apply to the nation's public drinking
water systems and enforcing those standards. US EPA
has a national headquarters and 1 0 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 US
EPA 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 US EPA Region VIM in Denver,
and Region III in Philadelphia, respectively). US EPA also
administers 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 construction, 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 provide 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 US EPA began providing grants to
states in order to assist in implementation 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 2004, the amounts
have grown to $10.9 million and $102 million.
Funding for Drinking Water Infrastructure
and Maintenance
The cost of making water safe continues to rise. Much of
the existing drinking water infrastructure (underground
networks of pipes, treatment plants, and other facilities)
was built many years ago. The US EPA Drinking Water
Infrastructure Needs Survey, released in 2001, estimated
that drinking water systems will need to invest $150.9
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 US EPA 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 US EPA.
The first grants from the Drinking Water State Revolving
Fund, DWSRF, were distributed to states, tribes, and
territories from the 1997 appropriation and totaled
$1.275 billion. From 1997 through 2003, cumulative
federal grants for the DWSRF program to states total over
$5 billion. In addition to the federal grants awarded,
states are required to provide matching funds equal to
20% of the federal grant award received for the DWSRF
program.
The majority of funds received by the state DWSRF
programs are then loaned, at below market interest
rates, to water systems for projects designed to help meet
health-based standards for drinking water. Some of the
funds from the federal grant awards can be directed into
set-aside accounts by the states. Each year, a state may
set-aside up to 31% of its federal grant award to fund
certain specified components of the state's drinking water
program activities. These set-aside funded activities can
include administration of the DWSRF program, technical
assistance to small drinking water systems, state drinking
water program management, and local assistance or
other state drinking water programs. Each state decides
what percentage of set-aside to use, and how to use the
set-aside funds based on public input and participation.
State set-asides have on average represented
approximately 16% of federal DWSRF grants, cumulative
from 1997 through 2003.
There are also national set-asides, which target funds
from the overall DWSRF appropriation to address
specific purposes. These national set-asides are used to
fund drinking water projects for American Indian Tribes
and Alaska Native Villages, to conduct monitoring of
unregulated contaminants, and for reimbursement of
drinking water operator certification training expenses.
In FY 2004, national set-asides of $12.7 million were
taken for American Indian Tribes and Alaska Native
Villages, and $2 million were set-aside for unregulated
contaminant monitoring.
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
To learn more about drinking water costs and federal
funding, call the Safe Drinking Water Hotline at 1-
800-426-4791 or visit the safewater web site at www.
epa.gov/safewafer.
Office of Water (4606)
www.epa.gov/safewater
EPA 816-F-04-038 June 2004
------- |