EDITORIAL

Who Pays for Water Security?

Thomas Walski, F.ASCE

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Senior Advisory Product Manager, Bentley Systems, Haestad Solution

Center, 3 Brians Place, Nanticoke, PA 18634. E-mail: Tom.Walski@
Bentley.com

rate-payers of those companies are paying taxes but receiving no

benefits. Having rate-payers pay for their own security measures
avoids these issues.

Background

Difficulty in Raising Rates

Ive been attending quite a few meetings and workshops on water

system security lately and one of the issues that comes up is how
to pay the extra costs associated with providing security for water
supply systems. Some say that the federal government should pay
the bill, but Im not sure if the individuals who propose this
understand where the federal government gets its money.
The costs are not trivial and include vulnerability assessments,
emergency management planning, physical security measures, security personnel, monitoring and surveillance, and redundant facilities. While most utilities have always had some of these measures in place, the needs and costs have significantly increased in
recent years because of the increased concern over potential terrorism directed at water supplies.
Basically, the issue boils down to one of whether we should
pay for water system security with rate water bill money or tax
money. There are good arguments on both sides.

Water utility managers hate to raise rates. Rate increases are a

painful experience. Many utility managers would rather see taxes
raised by $2.00 before they would raise rates by $1.00. Utility
managers can issue press releases on how they prevented or
minimized a rate increase by receiving a federal security subsidy.
Its amazing how many customers will scream about a modest
rate increase while the federal government siphons huge amounts
of money from their pockets. Grants paid for with tax money,
however, look good from a public relations standpoint.

Local Responsibility
With water security measures funded through water bills, the
money is spent essentially in the same community where it is
raised. If Town A wants to do a better job on security than Town
B, then rate payers in Town A will pay higher water bills.

Efficient Spending
If security measures are funded by rate increases, the money is
more likely to be spent intelligently. With rate money, $0.95 of
each dollar will actually be spent on security, whereas with tax
money its unlikely that the federal bureaucracy will provide
$0.70 for security from each of our dollars it takes. Water utilities
manage their revenue and my money better than the federal
government.

Well Owners Shouldnt Pay

A large number of U.S. citizens have private wells. With taxpayer
funding, those individuals will be paying taxes for urban water
systems even though they wont directly benefit.

System Size
The impacts of a security failure on a larger system will be significantly greater than one on a smaller system. However, because
of economy of scale, providing security for larger systems will
cost each individual served less. This implies that there should be
higher standards for larger systems but gives the impression that
customers of small systems are not important.

Tax the Rich

Federal income taxes are supposed to be progressive i.e., tax the
rich. Those with the greatest wealth should pay the most for
security while the poor should not need to pay anything. Tax
money spent on security accomplishes a distribution of benefits
among different taxpayer classes.

Poorest Customers
While there are good arguments for paying for security from rates
rather than taxes, there are some customers who simply cannot
afford to pay for water. Each year, numerous customers lose water
service because of their inability to pay their water bills. Raising
rates to pay for security will drive more customers into this group.
There should be provisions such that the poorest customers do not
lose service because of security-driven rate increases.

Summary
Investor-Owned Systems
Other U.S. water consumers are served by investor-owned utilities, and many of the owners of those systems are foreigners. If
those utilities receive security funding, then taxpayers are subsidizing foreign interests with tax money. If they dont, then the

While neither case for security funding is totally compelling, in

this writers opinion, it makes more sense to pay for water system
security through water bills rather than tax increases, with provisions that the poorest of the poor will not lose water service as a
result. Implementation of water security measures should in general be a local responsibility.

JOURNAL OF WATER RESOURCES PLANNING AND MANAGEMENT ASCE / NOVEMBER/DECEMBER 2005 / 409

J. Water Resour. Plann. Manage., 2005, 131(6): 409-409