One Water

Integrated Urban Water Management
Financial and Business Models for Utilities Supporting Implementation in Cities in Texas

By: Dr. Jacqueline Ashmore, Dr. Margaret Cherne-Hendrick, Victor Marttin

Texas has considerable experience grappling with water issues, with an historic drought in the 1950s and a notable drought in 2011. Despite that, Texas’ water management challenges are set to increase, with pressures from urban densification, water scarcity and flooding, aged infrastructure, and a management system that does not reflect the true cost of water. Our research identifies opportunities for Texas cities to transition to an integrated urban water management approach in order to address these challenges and bridge the growing gap between Texas’ water needs and demand. We propose novel revenue and business models that can support Texas’ water utilities in their adoption of more sustainable, resilient, and integrated practices.

Integrated urban water management, or “One Water,” is an emerging water management paradigm that emphasizes the interconnectedness of water throughout the water cycle and focuses on opportunities that arise from this holistic viewpoint. Two key aspects of One Water are coordination of water management processes across the water stakeholder community and valuation of water that reflects its true cost. The One Water concept centers on coordination across diverse stakeholder groups, including multiple players who are involved in the financial and economic dimensions of water management. However, we identify the utilities as playing a central role in water planning, maintenance, and operations that positions them uniquely to drive change in the business models for integrated urban water management. At a time when US water utilities are faced with the challenges of urban densification, water scarcity and flooding, aged infrastructure, and insufficient capital budgets, the One Water management approach offers an avenue to adapt utility revenue and business models towards achieving sustainable, resilient, and integrated urban water systems.

We investigate how to affect a successful transition to a One Water approach in the Texas cities of Austin, San Antonio, Houston, and Dallas-Fort Worth. Each city has unique, existing water management challenges and opportunities. The differences across these urban areas are grounded in projected population growth, patterns of water availability, water source variation, and the extent to which cities have engaged with best management practices for the future. We report on key case studies that draw on Texas stakeholder interviews, local and regional water management programs, and experience from other comparable urban water management systems across the US and internationally. These case studies are utility-scale scenarios that depict opportunities for advancing One Water in Texas cities in the areas of water sourcing (aquifer storage and recovery; distributed infrastructure planning), revenue models (novel rate structuring; revenue sources beyond ratemaking) and capital sourcing (green bonds; public–private partnerships).

The financial aspects of these case studies will be incorporated into a modeling framework that builds on utility revenue models developed by University of North Carolina and the Alliance for Water Efficiency, and incorporates analysis of maintaining revenue stability with capital investments factored in.  The expanded model will incorporate key aspects of the One Water framework such as reuse, distributed water treatment and low impact development, and demand projection.  It will be a toolbox for utilities, providing analysis of different revenue and cost trajectories based on different urban water management strategies – including some that typically fall outside today’s utility framework.  This can be a practical tool that supports effective implementation of One Water.