Effective Funding Frameworks for Water Infrastructure
An important focus of the Water Infrastructure and Resiliency Finance Center is encouraging effective use of federal, state and local funds. The Center:
- Builds on the successful Clean Water State Revolving Fund and Drinking Water State Revolving Fund and funding from federal partners.
- Supports innovative financing and coordinated funding of projects to leverage these federal dollars.
- Coordinated Federal Funding
- Resources for Water Infrastructure Planning and Design
- Other Funding Sources
EPA, U.S. Department of Agriculture (USDA) and U.S. Department of Housing and Urban Development (HUD) are the main sources of federal funding for drinking water, wastewater, and stormwater infrastructure.
Through the CDBG program, HUD funds local community development activities that expand economic opportunities, principally for low and moderate income areas. The program can fund drinking water and wastewater projects. Program areas include:
- The State Administered CDBG Program focuses on smaller communities, including cities with a population under 50,000 and counties with a population under 200,000.
- The CDBG Entitlement Program allocates annual grants to cities with a population of at least 50,000, and urban counties with a population of at least 200,000.
- The Section 108 Loan Guarantee Program enables these states and entitlements communities to leverage up to five times their CDBG allocation for federally guaranteed loans to undertake water and sanitation projects.
Department of Commerce Economic Development Administration (EDA)
EDA supports development in economically distressed areas of the U.S. through strategic investments that foster job creation and attract private investment. EDA's Public Works Program helps communities in economic decline upgrade their physical infrastructure, including drinking water and wastewater facilities. EDA grants can underwrite planning and construction costs for projects in these areas that lead to job creation in the community.
Information on funding for water and wastewater infrastructure projects:
- Environmental Finance Center Network - Funding Sources by State
- Federal Funding for Utilities – Water and Wastewater – in National Disasters (Fed FUNDS)
- Catalog of Federal Funding Sources for Watershed Protection
Federal Agencies and many states have resources and tools to coordinate the various sources of drinking water and wastewater infrastructure.
Funding Collaboration Guide (PDF) (18 pp, 999 K, About PDF)
EPA developed this guide to share funding ideas and collaboration practices. The guide focuses on drinking water collaboration, but can apply to other types of water infrastructure.
Small Community Water Infrastructure Exchange (SCWIE)
This network of water funding officials focuses on small communities. SCWIE lists contact information for statewide support groups that help coordinate funding across federal, state, and local agencies.
Interagency Preliminary Engineering Report Template (PDF) (22 pp, 343 K, About PDF)
Many federal and state agencies require applicants to submit a Preliminary Engineering Report (PER). USDA Rural Development, Rural Utilities Service formed a working group in 2012 with other federal agencies to develop an interagency PER template. This template streamlines coordination between funding agencies.
Drinking Water State Revolving Fund (DWSRF) Set-Asides
Set-asides from the state DWSRFs fund capacity building activities. These upfront planning activities increase eligibility for DWSRF funds.
Clean Water State Revolving Fund (CWSRF)
Some states fund planning and design work through their program. Investment decisions to fund planning and design are made by each state.
Federal Guide for Infrastructure Planning and Design
This community resource guide highlights planning and design programs from eight federal agencies. The guide includes principles to inform local and state governments, public and private utilities, planners, and other stakeholders.
The Congressional Budget Office Report on Federal Investment shows that water infrastructure is funded by local, state, and federal government sources. A key financing component for many drinking water and wastewater projects is state and local government funding such as:
- Water rates and surcharges.
- Municipal bonds.
- Private capital.
In addition to federal and state resources, nonprofit foundations have provided funding for water infrastructure: