No More Money Down the Drain: How State Comptrollers and Auditors Can Help Stop Leaks in Drinking Water Systems...and Save You Money

Every day, billions of gallons of expensive, treated water is simply lost from public drinking water systems due to leaking, aging pipes. Much of that water gushes from more than 237,000 water main breaks across the country every year. Even more of it seeps (or gushes) from chronic leaks, typically underground, out-of-sight and out-of-mind.

Today NRDC launched a new website, Cutting Our Losses: State Policies to Track and Reduce Leakage form Public Water Systems, aimed at promoting policies that prevent this needless waste of water. The site grades states based on the strength of their policies for reporting water losses accurately and setting targets for water loss reduction.

It's not just that wasting billions of gallons of water every day is inherently...well, wasteful. We live in an era of growing water scarcity--or increasingly erratic water supply--in much of the country. There is an urgent need to improve our water use efficiency to ensure we have safe and sufficient water--for people, farms, and ecosystems--now and into the future.

And if we don't fix this problem, more than water is going down the tubes. It's also taxpayers' and ratepayers' money. In other words, your money.

Every gallon of water that's lost from a chronically leaky water distribution system--or from a busted water main--has cost you money even though it never reaches your tap. How? It's because your water bill pays for things like:

  • operating the plant that treated the wasted water to drinking water standards;
  • running the massive pumps that delivered the wasted water to and from the treatment plant;
  • repairing the main break or steadily leaking pipe that could have been avoided through preventative maintenance, and through better management of pressure in the water supply system;
  • repairing the streets, sidewalks, and other infrastructure damaged by a leak or water main break; and
  • reimbursing private property owners for damage caused by water main breaks or leaks.

Drinking water utilities that don't proactively address "water loss" in their system are absorbing these often avoidable costs as a fiscal loss in their operating and capital budgets. And the costs get passed on to you in your water bills. If your local water system is funded only partly by user fees, some of the costs are passed along through your local taxes too. Local taxes may also be picking up the tab for repairs to roads, sidewalks, and other non-water public infrastructure that's damaged by water leaks.

And believe it or not, you may even be paying extra through your sewer bills to treat this wasted water yet again. Since water distribution pipes are often located directly above sewage collection pipes, and aging sewer pipes tend to let a lot of water seep in from surrounding soils, a significant portion of the water that leaks from your local drinking water system may find its way in to your local sanitary sewer system. What do you get when you add a gallon of water to a gallon of sewage? Two gallons of sewage. And sewage needs to be treated, at a cost to sewer utility customers. (The City of Philadelphia--a national leader in proactively reducing water loss--has estimated that this is the fate of 25% of the water that leaks from its drinking water distribution system. You can find the city's most recent water loss audit here, or by clicking the "faucet" icon for Philadelphia on the map on our website.)

So, what do state Comptrollers and Auditors have to do with wasted water? A whole lot, since their chief responsibility is making sure state and local agencies are not wasting taxpayer money. And, as we've seen, wasted water is wasted money. A water system that's unnecessarily losing water is hurting its bottom line and charging you to make up the deficit.

Further, while most water systems aren't for-profit entities, the market can still catch up to this sort of mismanagement, hitting taxpayers (read: your pocket-book) yet again. Public water utilities depend on the municipal bond market to raise funds for necessary capital investments. But poor fiscal management--including excessive water loss--can lead to a downgrade in bond ratings. And that means an increase in borrowing costs for the utility. Those costs get passed along, the drinking water customer. Think this is just hypothetical? Think again. Just over a month ago, this happened in Jackson, Mississippi. As reported in the local news, one factor cited by Moody's in downgrading the bond rating was that the "the city's water department is losing about 40 percent of its water within the existing infrastructure." As the news report further explained, "The downgrade could mean that water rates in the city will be increased to combat higher interest rates."

State Comptrollers in some states are starting to take notice.

In one of the top three states in our scoring system for water loss policies, it's the state Comptroller that's leading the way. The Tennessee Comptroller of the Treasury requires water utilities to use the water audit methodology and standardized reporting format developed and endorsed by national leaders in the water utility industry. Each utility must submit its annual water audit to the Comptroller as part of its annual audited financial statement.

In New York, only rudimentary water loss auditing and reporting is required. But the State Comptroller has conducted dozens of audits of municipal water systems showing massive water losses--and resulting financial losses. A 2002 New York State Comptroller's report on six municipal water utilities found significant water loss from leaky pipes, and very poor controls on measuring that or fixing it. The report's top recommendation was "Municipal officials [should] perform water audits at least annually to strengthen accountability over their water resources and to assist in identifying cost-effective methods to reduce waste, minimize unaccounted-for water and decrease system demand." Between 2009-2014, the Comptroller's office has analyzed water loss in connection with audits of more than two dozen municipalities. These audits have found a consistent pattern of very high rates of water loss (using a relatively crude calculation method)--three-quarters of utilities had losses over 20%, and half or more had losses over 40%. The Comptroller's recommendations in these audits have consistently included the need for utilities to maintain better water loss data and improve auditing methods.

The nationwide tracking map on our website shows a growing number of states that are requiring all utilities to perform and submit annual water loss audits using the industry standard methodology. The best among them--so far, only one state, Georgia--goes even further to require third-party validation of water loss audit data. And a further best practice--system-specific, volume-based performance benchmarking for reducing water loss--is used by some utilities but is not yet required by any state.

Fortunately, the tools already exist to address water loss and, by embracing them, states can help achieve real dollar savings for public water utilities and their customers and taxpayers.

But, as the old adage goes, you can't manage what you don't measure. That's why the foundational policies we urge states to adopt are focused on water loss audits.

When it comes to state and local government finances, State Comptrollers and Auditors are the 'measurers' par excellence. Since lots of lost water--endemic to water systems throughout the country--equals lots of lost money, the time is ripe for State Comptrollers and Auditors to take up the mantle on water loss audits.

(Post-script: The current monthly newsletter of the National Association of State Auditors, Comptrollers, and Treasurers features a guest article I penned on exactly this topic. See p. 10 here.)

This is one post in a series of blogs accompanying NRDC's launch of a new website, which tracks state policies to audit and reduce leakage from public water systems. For more on this issue and our new website, see today's blogs by my colleagues Ed Osann and Karen Hobbs.


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