States collectively have not committed $9.6B in available funding to invest in water, wastewater, and stormwater infrastructure, according to a new report from the Environmental Policy Innovation Center (EPIC) and the Water Policy Program at Duke University’s Nicholas Institute for Environmental Policy Solutions.
States and the federal government invest in water infrastructure by providing subsidized loans and other financial assistance through State Revolving Fund (SRF) programs. The funds are capitalized with federal grants, state contributions, and loan repayments, which replenish the pool of capital to finance infrastructure over time. Loan repayments are now the largest source of capital for SRFs. The bipartisan infrastructure law passed by Congress in 2021 will provide states with an additional $55B in new funding for SRFs over the next five years.
“Uncommitted funds represent missed opportunities to improve public health and water quality, spur economic development, and create jobs through infrastructure investment.” said Katy Hansen, Deputy Director for Water Policy at EPIC and a co-author of the report. “As the bipartisan infrastructure law substantially increases the amount of assistance available through SRFs, it is imperative to understand how states can efficiently allocate funds to reach their full potential.”
The report is based on an analysis of data from the U.S. Environmental Protection Agency, interviews with stakeholders, and a survey of more than 200 water system decision makers.
It identifies three main recommendations to help states allocate funds:
- Set and track goals for the allocation of funds.
- Stimulate demand for funds.
- Enhance effective administrative practices.
Unused SRF dollars are not spread equally across states. Fifteen states fully allocate available funding. The report found that these states provide technical assistance, make the application process easier, offer attractive loans awards, and use cash flow models to ensure that every available dollar finances projects. Meanwhile, 10 states and Puerto Rico have more than 10 percent of cumulatively available funds sitting unused. These jurisdictions account for nearly half ($4.54B) of uncommitted SRF funds nationwide.
The report was written by Katy Hansen (EPIC), Govind Sawhney (EPIC), Simon Warren (Duke University), and Martin Doyle (Nicholas Institute for Environmental Policy Solutions).
About Environmental Policy Innovation Center (EPIC)
The Environmental Policy Innovation Center (EPIC) is a nonprofit organization based in Washington, DC whose mission is to build policies that deliver spectacular improvements in the speed and scale of conservation and environmental progress. In our water work, we focus on innovative policies that improve health, access, and affordability; eliminate disparities across water systems; and build public trust in water supplies. For more information, visit www.policyinnovation.org.
About Duke University’s Nicholas Institute for Environmental Policy Solutions
Established in 2005, the Nicholas Institute for Environmental Policy Solutions is a nonpartisan institute that connects Duke University’s scholarly research to public and private decision makers to create timely, effective and economically practical solutions to critical environmental and energy challenges. The Nicholas Institute’s core team of policy experts, economists, scientists and attorneys develops non-partisan research and analysis, as well as convenes stakeholders to foster open, ongoing dialogue around environmental issues. In July 2021, the Nicholas Institute began the process of merging with the Duke University Energy Initiative. The resulting new organization will play a key role in Duke University’s heightened efforts to address climate change and its impacts, while continuing to advance solutions for other pressing environmental challenges. For more information, visit nicholasinstitute.duke.edu.