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Q2
2016
Waterside Chat: Industry One-on-One Interview
What are some of the biggest obstacles facing the municipal water market?
There are several issues that continue to plague the municipal water and wastewater market. One of the biggest challenges facing
nearly all municipalities is an aging workforce. As workers retire, there is often a big experience gap in those called upon to replace
retiring workers. The issue hits small and medium sized cities hardest, where there are fewer members of staff to begin with. We
see many opportunities for our services driven by the expected loss of key staff members in the communities we serve.
Another issue facing the municipal water and waste water treatment industry is the sheer cost of upgrading treatment
infrastructure. While plants are expensive in and of themselves, there are even more latent problems looming in many communities’
horizontal infrastructure. Given the miles of aging pipe in place, our industry is facing problems that have been kicked down the
road for far too long.
The impact of both of these issues can be lessened by having third party support help municipalities, either to provide labor, capital or
expertise. Sometimes, though, municipalities are reluctant to embrace an outsourced solution, preferring to deal with their issues in-
house for political or perceived cost saving reasons. This is a shame, though, as private operators are far easier to hold accountable
than in-house operations, and many municipalities are missing an opportunity to have real expertise brought in to assist them.
What do you see as opportunities within water (and/or wastewater)?
Given a host of issues facing municipalities today—aging workers, outdated assets, unmet pension liabilities, mounting debt—some
municipalities are seeking to monetize their water and wastewater assets through concession agreements. In exchange for a large
upfront payment to the municipality entering the agreement, a concessionaire would assume responsibility for the operation and
upgrade to any given city’s assets. The concessionaire would then assume full utility management of the system, and would also
manage the income provided by the ratepayers of the system. A concessionaire would get a long term operating contract, while a city
would get guaranteed operation, along with a sizable upfront payment for them to use in retiring other liabilities.
We are also seeing increasing interest from industry to operate their water and wastewater assets, as they turn their attention to their
core business.