Water Supply Infrastructure Investments Require Adaptive Financial Assessment: Evaluation of Coupled Financial and Water Supply Dynamics
Publication: Journal of Water Resources Planning and Management
Volume 149, Issue 3
Abstract
Water managers must constantly balance investment in infrastructure upgrades to ensure reliable water supply with the affordability of water rates for consumers. As a result, trade-offs between water supply and financial objectives have become central to the long-term sustainability of utility operations. Few studies, however, have directly quantified decision-relevant financial benchmarks of water supply system adaptation. Benchmarks include debt covenants, guidelines required by creditors seeking assurance that debt will be repaid. Violation of covenant thresholds risks a downgrade of a utility’s credit rating, higher interest rates on future debt, and higher costs for new infrastructure. This work introduces an exploratory modeling framework that carefully couples adaptive water supply planning with financial modeling to better track how utility budgetary decision making can adapt to infrastructure expansion and future water demand growth. Demonstrated through an evaluation of infrastructure planning for Tampa Bay Water (TBW), results showcase TBW budgetary adaptation in response to water demand growth and supply expansion, quantifying the financial implications of infrastructure planning decisions and demand growth on water rates as well as the bond covenants. This study underscores the importance of integrating dynamic and adaptive financial modeling in providing realistic decision support that addresses both supply reliability and financial stability.
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Data Availability Statement
All data is available upon request, and all code to model and reproduce supply and financial modeling results can be found at https://github.com/davidfgold/TampaBayWater.
Acknowledgments
The authors would like to thank Tampa Bay Water for funding this research. As well, we thank TBW finance (Christina Sackett), projects (Maribel Medina), planning (Solomon Erkyihun and Ken Herd), and information technology (Brian Kyle) staff for their constant assistance in accessing data, interpreting findings, and troubleshooting all modeling and technical issues.
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Journal of Water Resources Planning and Management
Volume 149 • Issue 3 • March 2023
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© 2022 American Society of Civil Engineers.
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Received: May 25, 2022
Accepted: Oct 23, 2022
Published online: Dec 20, 2022
Published in print: Mar 1, 2023
Discussion open until: May 20, 2023
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