Water-as-a-Service® helps communities with upgrades and maintenance
As the demand for water continues to grow, so does the need for upgraded water infrastructure, along with sustainable financing solutions to support those upgrades. Water-as-a-Service®, or WaaS®, offers a revolutionary approach that can redefine how we fund, develop, manage, and maintain water systems.
Unlike conventional financing mechanisms, WaaS® doesn’t focus solely on upgrading existing infrastructure; it offers a completely new approach.
Water infrastructure across the United States is aging and in dire need of upgrading, which requires significant investment. A 2019 study estimated that more than $1 trillion is needed over the next 25 years to restore the nation’s water infrastructure to acceptable standards. According to the authors of the study, “Investment in upgrades involves addressing complex questions: Who pays, who benefits, and which redesigns will prove robust and resilient in the future?”
Challenges of Traditional Water Infrastructure Financing
In the past, large-scale water infrastructure projects have been financed mostly by public resources and municipal budgets. While these approaches have provided communities with essential services, there are several constraints that can hinder service delivery.
Most municipalities have to work with limited budgets spread across a broad range of projects. This could mean there are insufficient funds to devote to water infrastructure upgrades. That can lead to water systems not being maintained properly and a reduction in the level of service provided to consumers.
Densely populated urban areas that are experiencing rapid growth may require extensive upgrades to meet the demand for water services. Relying solely on public funding may prove insufficient.
Additionally, traditional water infrastructure financing often faces challenges in adapting to changing environmental conditions. Climate change and its unpredictable effects on water resources can strain existing infrastructure, necessitating costly modifications and upgrades. Public financing models may struggle to keep pace with the dynamic needs of water management in an era marked by increasing climate variability.
Another constraint might be a lack of capacity and knowledge. Conventional public administration of water infrastructure may lack the efficiency and innovative solutions that private-sector expertise can offer.
Enter WaaS®: A Paradigm Shift in Financing
Pioneered by Seven Seas Water Group, Water-as-a-Service® represents a new approach to water infrastructure financing. It addresses many of the challenges faced by conventional funding methods, resulting in improved sustainability, efficiency, and cooperation. Let’s explore some of the WaaS® options and how they are revolutionizing the way water infrastructure is financed.
WaaS® promotes collaborative partnerships between public entities and the private sector to design, finance, construct, operate, and maintain water infrastructure projects. Public-private partnerships (PPPs) benefit from the combined strengths of both sectors, facilitating more streamlined project execution and often attracting private investment capital.
Within the framework of WaaS®, build-own-operate (BOO) agreements empower private enterprises to design, build, operate, and manage water infrastructure assets for a specified period. During the term of the contract, the private entity takes on ownership and accountability for the infrastructure, with the municipality paying a fee for the service or water delivered. This allows for creative financing models that are attractive to both parties.
Build-own-operate-transfer (BOOT) agreements are similar to BOO contracts. Both involve private entities designing, constructing, financing, owning, operating, and maintaining water infrastructure. However, BOOT contracts typically involve a hand-over phase, where ownership of the infrastructure reverts back to the public sector.
Benefits of WaaS® Are More Than Financial
While WaaS® offers an innovative approach to financing water infrastructure upgrades, there are several other advantages.
Improved Efficiency and Innovation: Private sector involvement in WaaS® brings in broader expertise that often introduces improved efficiency and innovation. That can streamline project completion, lower operational costs, and enhance the overall performance of water systems.
Risk Sharing: Within the context of WaaS®, there is an emphasis on the fair allocation of risk between public and private entities. This ensures project risks are managed effectively while offering incentives for private investment.
Improves Cash Flow: By leveraging private capital, WaaS® can help municipalities and governmental agencies get the water infrastructure they need without the huge capital outlay typically required. This alleviates the immediate financial burden typically associated with rolling out water projects, facilitating essential upgrades without impeding cash flow.
The Road Ahead for WaaS® Financing
WaaS® has proven to be a viable and innovative solution for financing the upgrades needed to meet the growing demand for water, and it will continue to do so. In the future, Water-as-a-Service® financing is likely to play a pivotal role in addressing the complex challenges of water infrastructure funding. Its ability to combine public resources with private sector expertise and capital makes it a key player in providing infrastructure solutions that ensure communities have sustainable access to safe drinking water for generations to come.
