Rural America Matters: Water Infrastructure Essential for Economic Growth

By Nivin Elgohary, Senior Vice President, Electric Distribution, Water and Community Facilities

As CoBank’s Senior Vice President for Electric Distribution, Water and Community Facilities Banking Division, Nivin Elgohary manages more than $13.5 billion in total commitments to the rural infrastructure industry nationwide.

We all know that access to clean water is critical for personal health. What isn’t as immediately apparent is how essential access to a consistent supply of water is to the economic vitality of our rural communities. Across America, water companies are working diligently to meet both of these important needs.

For most water utilities, aging infrastructure is a huge, ongoing challenge. Especially in the Northeast, it’s not uncommon to have pipes more than 75 years old pumping water to homes and businesses. Keeping those water systems up to the highest standards requires ongoing capital investment. Connecticut Water knows that story all too well. The utility serves 50 rural towns in Connecticut with populations less than 20,000, some of the systems it owns date back to 1849. Since 2007, Connecticut Water has replaced more than 62 miles of pipe with an average age of 74 years.

Supporting rural communities and the businesses that provide their economic lifeblood is a key role for water providers. Without the capacity to deliver enough safe water, communities can’t grow, businesses can’t expand, and opportunities for new employers to revitalize rural areas are lost.

Rural Water System No. 1 in Hospers, Iowa is one example of a water provider stepping up to ensure that farm families and their agricultural operations are able to thrive. The company serves only 1,260 accounts in northwestern Iowa, but those customers include residents of two small communities, an ethanol plant, meat packing facilities and more than 15 million thirsty head of livestock — dairy cows, hogs, poultry and even dog breeders. “With all that livestock, it’s not uncommon, when the temperature reaches over 85 degrees, for us to double our water usage in a day,” General Manager Randy Iedema said. “That stresses the system. We need more capacity and more flexibility. We can’t just be sitting here hoping we have enough water; we need a backup so our residents and livelihoods can be sustained.” The company worked with CoBank and the U.S. Department of Agriculture to purchase 300 acres of land for a new well field and more than double the size of one of the system’s water treatment plants. The project, completed in 2011, allows Rural Water System No. 1 to tap different aquifers, creating a new supply of water that gives the system flexibility to meet the demands of local customers under any conditions.

Such efforts to continue to deliver clean and safe water, and to properly treat waste water to ensure environmental safety, come with a price tag. Earlier this year, the U.S. Government Accountability Office released the results of their study of rural water infrastructure, and found that many communities are finding it difficult to cover the cost of water system improvements or enhancements, in part because of their smaller number of residents and businesses. According to the most recent EPA Drinking Water Needs Survey, $110.4 billion in investment is needed for rural water systems serving populations of less than 10,000.

Water systems must then find the funds elsewhere. Some comes from the Environmental Protection Agency through the Drinking Water and Clean Water Revolving Funds – $907 million in funding and $1.45 billion in assistance in 2014. The Department of Agriculture's (USDA) Rural Utilities Service provides another source, with $452 million in grant funding provided last year along with $1.2 billion in loan authorization. Other federal agencies also play a role in providing funds to enable rural water systems to meet the needs of our rural communities, but it isn’t enough. Farm Credit is filling the breach, not just for Connecticut Water and Rural Water System No. 1, but for many other rural water systems throughout the nation to the tune of more than $1.4 billion in loans as of March 31, 2015. Farm Credit offers a variety of loan products to compliment EPA and USDA financing, such as bridge financing, interim financing and long term loans. Farm Credit is also experienced in participating in Public-Private Partnership project financing structures for water systems.

Farm Credit supports rural communities in a number of ways, including providing financing for water and waste water treatment projects that help keep our fellow citizens healthy and their businesses able to thrive.