Financial Risks of Developing New Water Supply Reservoirs in the Southeast, and Elements of a Prudent Path to Securing Water Supplies

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Emanuel, Ben
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This paper is based on our July 2012 report documenting the financial and water resource risks tied to developing new water supply reservoirs in the Southeast. Many local governments throughout Georgia are consider-ing significant spending of taxpayer and ratepayer dollars to build new reservoirs. Georgia reservoir proposals as of 2012 could total $10 billion in taxpayer and ratepayer dollars. We outline five financial and water resource risks inherent in the pursuit of new water supply from reservoirs: (1) Reservoirs are highly expensive, usually bringing on debt for ratepayers and taxpayers; (2) a reservoir’s cost is typically a “moving target;” (3) reservoir financing plans often rely on high population growth projections, ultimately leaving existing residents responsible for costs; (4) a reservoir depends on increasingly uncertain rainfall and loses water when high temperatures cause evaporation; and (5) reservoir water is a contested resource subject to competing demands in the river system. We also examine recent projects that provide cautionary tales of communities burdened by borrowing capital to develop new reservoirs. We offer five key recommendations for local leaders who seek to reduce their communities’ risks in planning for enough clean water for the future: (1) Optimize existing water infrastructure first; (2) plan for water use to de-crease as a community grows; (3) pursue flexible water supply solutions; (4) demand accurate assessments of costs; and (5) examine water availability to minimize re-source risks. As communities endeavor to secure water supplies, it is critical that decision-making enhance the community’s flexibility and resilience. Water supply strategies that can respond to unexpected economic and climatic changes place a community in a better financial position when facing an uncertain future. Low-impact supplies rooted in efficiency are best suited to this task.
Sponsored by: Georgia Environmental Protection Division; U.S. Department of Agriculture, Natural Resources Conservation Service; Georgia Institute of Technology, Georgia Water Resources Institute; The University of Georgia, Water Resources Faculty.
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