Climate Change in the Drinking Water and Wastewater Sectors and the Impact on Financial Resilience, Insurability, and Credit and Investment Quality

Climate Change in the Drinking Water and Wastewater Sectors and the Impact on Financial Resilience, Insurability, and Credit and Investment QualityAbstractDrinking water, wastewater, and stormwater (water sector) utilities are experiencing more costly operational and financial impacts from the increased frequency and severity of climate change-related disasters. As a result, the financial and insurance industries are increasing their focus on climate change risk in their assessments of water sector utilities. Thus, it is important that water sector utilities properly identify, manage, and disclose climate change risk and resiliency efforts not only to ensure that they can continue to reliably and effectively provide essential water services, but also because doing so can influence the utilities' credit ratings, investor relations, and ability to attract investors and access insurance coverage at an affordable price. In 2022, the U.S. Environmental Protection Agency's Creating Resilient Water Utilities (CRWU) initiative convened a Financial Working Group comprised of subject matter experts from the financial and insurance industries, academia, and water sector utility managers to address this topic. The Workgroup participated in a series of virtual and in-person meetings from June 2022 through January 2023. The Workgroup recognized that water sector utilities that effectively identify, manage, and disclose climate change risk and resiliency efforts in a responsible manner are more highly rated, broaden the investor base, improve insurance access and pricing, and gain more support from ratepayers. The Workgroup further discussed three main topics: 1) data to identify climate change threats at water sector utilities; 2) methods and practices to identify and assess climate change risks; and 3) effective outreach and disclosure practices to manage these risks. This session will include a presentation of the working group's process, findings, and continued work along with an interactive panel discussion including key working group members. The panel will highlight the varying sector perspectives and discuss commonalities and areas for the sectors to better collaborate. An audience-driven question and answer session will follow the presentation and panel discussion.This paper was presented at the WEF/AWWA Utility Management Conference, February 13-16, 2024.SpeakerFurneaux, AlizaPresentation time16:00:0016:30:00Session time15:30:0017:00:00SessionFinancial Resilience for Utilities and Customers AlikeSession number11Session locationOregon Convention Center, Portland, OregonTopicFinancial Resilience including funding mechanisms, Rate and Fee studies, and Affordability.TopicFinancial Resilience including funding mechanisms, Rate and Fee studies, and Affordability.Author(s)Furneaux, AlizaAuthor(s)A. Furneaux1, C. Baranowski1, K. Ving2, M. Ries3Author affiliation(s)Environmental Protection Agency 1; Brown and Caldwell 2; DC Water SourceProceedings of the Water Environment FederationDocument typeConference PaperPublisherWater Environment FederationPrint publication date Feb 2024DOI10.2175/193864718825159301Volume / Issue Content sourceUtility Management ConferenceWord count22