Drinking Water Equity
In this report, we evaluate how states allocate support from the Drinking Water State Revolving Fund (DWSRF) using national and state-level data from 2011 to 2020. This program already helps address disparities and has even more potential to do so. See the report here.
We find that states address disparities by targeting assistance towards:
Health: Communities with more health-based Safe Drinking Water Act violations are more likely to receive assistance.
Income: Communities with lower median household incomes are slightly more likely to receive assistance.
We also find that states could do more to address disparities by expanding:
Reach: 7.1 percent of eligible drinking water systems have received assistance.
Additional subsidies: 26.6 percent of total assistance was distributed as principal forgiveness, grants, or negative interest loans, despite a federal ceiling of 35 percent for disadvantaged communities.
Diversity: Small communities and more racially diverse ones are less likely to receive assistance.
RECOMMENDATIONS
Based on our analysis of the allocation of Drinking Water State Revolving Funds, we offer the following policy recommendations.
Increase technical assistance to help systems with limited capacity
The EPA and state administrators could do more to ensure that communities have equitable access to DWSRF assistance. We recommend states:
Provide more assistance to systems with limited capacity to apply.
Engage third parties to advocate for communities and broker agreements.
Increase the amount of additional subsidies allocated to very low-income and high-poverty communities
Drinking water systems serving low-resource communities may be hesitant to accept loans due to affordability concerns. Low-resource communities can benefit significantly from assistance that does not need to be repaid, such as grants and principal forgiveness. We recommend Congress, the EPA, and states:
Increase the annual appropriation to the program.
Raise or remove the federal ceiling on additional subsidies for disadvantaged communities.
Set a higher floor on additional subsidies for disadvantaged communities.
Target the type of assistance by financial capacity.
Prioritize communities with high poverty rates
Communities with high poverty rates stand to benefit significantly from access to subsidized federal financial assistance. To channel more resources to communities with high poverty rates, we recommend states:
Include poverty rates in state definitions of disadvantaged communities.
Assign priority points to disadvantaged communities.
Develop equity criteria for non-DAC communities.
Track the demographics of communities served by DWSRF projects
Our findings show racial disparities in who is receiving DWSRF resources. Communities with larger white populations are more likely to receive funds. While Congress cannot require that states allocate resources based on race, many of the recommendations presented here can help historically underinvested communities better access the resources needed to invest in drinking water systems. In addition, the EPA can:
Require states track the demographics of beneficiaries of DWSRF-financed projects.
Require states report on efforts to achieve proportionate allocation of funding.
