Publications

Water and ESG: Rhetoric, Reality, and Opportunities

Building on the ongoing theme of “What does good water governance look like for the United States?,” the objective of the 2023 Aspen-Nicholas Water Forum was to explore why, despite the centrality of water to the environment, as well as to communities and society broadly, water has simply been overlooked in environmental, social, and governance (ESG) goal-setting processes, analyses, or frameworks. The forum also asked what might be the opportunities, or risks, of greater inclusion of water into ESG generally. This report highlights the discussions at the forum on how ESG does, and does not intersect with water, and what the challenges or opportunities might be.

Emerging Roles for Finance in River Restoration and Resilience

River restoration has primarily relied on public sources for funding projects, such as agency-based grants and philanthropy. More recently, there is growing interest in the potential role of private finance to offset the declines in public funding and to potentially increase the scale and scope of river restoration overall. This chapter, part of the book Resilience and Riverine Landscapes, reviews broad concepts in finance and then describes two broad types of private sector approaches to capitalizing restoration projects: voluntary markets and regulatory markets.

Climate, Race, and the Cost of Capital in the Municipal Bond Market

Both climate risk and race are factors that may affect municipal bond yields, yet each has received relatively limited empirical research attention. The authors analyzed >712,000 municipal bonds representing nearly 2 trillion USD in par outstanding, focusing on credit spread or the difference between a debt issuer’s interest cost to borrow and a benchmark “risk-free” municipal rate. The authors' combined findings indicate a systemic mispricing of risk in the municipal bond market, where race impacts the cost of capital, and climate does not.

Accounting for Residential Nonpayment Risk for Water Utility Financial Sustainability

Residential “nonpayment risk” for water utilities—the risk of revenue loss from residential customers not paying water bills—is a financial threat for water service providers that remains poorly understood. The authors developed a new heuristic model to categorize and evaluate water utility pricing (rate setting) strategies responsive to the effects of nonpayment (i.e., delinquency) on water utility revenues. The model is the first attempt, to our knowledge, to theorize the impact of residential nonpayment on utility revenues.

Affordability of Household Water Services Across the United States

Households that cannot afford their water bills may lose access to drinking water and wastewater services. This study seeks to quantify how many households may struggle to pay for water services across 787 of the largest drinking water providers in the United States. It finds that basic water services are unaffordable for 17% of households analyzed (28.3 million persons). The authors select 6,000 gallons per month as sufficient to meet basic needs and define undue hardship as spending more than 4.6% of household income (one day of labor each month) to pay for water services.

Water and Disasters: Risk, Resilience, and Adaptation

The 2022 Aspen-Nicholas Water Forum explored what must be done to ensure the water sector becomes more resilient to water-related disasters. How can communities navigate and prepare for the impacts of increasingly common water-related disasters. How do we reconcile different values as individuals, businesses, and government negotiate who receives resources to mitigate, adapt, and recover?

Financial Capability and Performance: Assessing Trends Among North Carolina Utilities

A team of researchers from Duke University's Pratt School of Engineering; Nicholas Institute for Energy, Environment & Sustainability; and the Nicholas School of the Environment assessed the finances of 301 North Carolina water utilities and identified a significant and growing group of communities facing a conflicting dilemma of water affordability and utility cost recovery.

Customer Assistance Programs and Water Affordability

Water affordability is a growing concern, with inflation, aging infrastructure, source water protection, climate change, and other factors pushing up the cost of providing water. Customer assistance program (CAP) rate discounts provide needed assistance but may not be sufficient to ensure that water services are affordable. Rather than relying on one approach, such as CAPs, a combination of approaches might be optimal for addressing water affordability issues.

Uncommitted State Revolving Funds

States and the federal government invest in water, wastewater, and stormwater infrastructure by providing subsidized loans and other financial assistance through State Revolving Fund (SRF) programs. The funds are capitalized with federal grants, state contributions, leveraged bonds, and loan repayments. Because the programs largely provide loans rather than grants, the repayment of principal and interest replenishes the pool of capital to finance infrastructure over time. Loan repayments are now the largest source of capital for SRFs.

Sensitivity Analysis of Using Municipal Boundaries as a Proxy for Service Area Boundaries When Calculating Water Affordability Metrics

Water is essential for life, and yet one of the nation’s most pressing water challenges has become ensuring that water services are affordable for households and communities. While there has been growing attention and concern around affordable water services, the actual scale of the problem remains poorly understood, in part because of the lack of data availability.