Xylem Inc.: it’s time to rebuild America’s water infrastructure
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Xylem Inc.: it’s time to rebuild America’s water infrastructure

In a recent article posted to its Impeller Magazine, global water technology company Xylem Inc. has made a strong case for the need to replace substantial amounts of the U.S.’s water infrastructure. According to the company, this is now a critical situation. Xylem’s senior vice president and chief marketing officer Joe Vesey put pen to paper to explain why.

Xylem’s share price has risen by 14% so far this year.

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SOURCE: Yahoo Finance

Vesey says that “a lot of America’s water infrastructure was constructed over 100 years ago. Installations peaked between 1925 to 1940. Most of that infrastructure has a useful life of 50 to 75 years, so on average we are well past that.”

Some experts have gone as far as to suggest that more than two trillion gallons of treated water is lost every year in the U.S. due to leaks that are a direct result of ageing. This means that already financially stretched water utilities are paying to treat water that never gets used – potentially on a massive scale!

Vesey thinks that these utilities are not to blame for the situation: “I have a lot of respect for our customers and the work that they do in their communities. They have a fairly small budget given their challenges, yet they are able to use their older asset base to deliver high quality, reliable water to millions of customers. There is a lot of ingenuity that goes into this that they don’t get much credit for.”

Nonetheless, the strain placed on these ageing systems can be hard to manage. And Vesey sees this becoming more problematic due to global warming: “Climate change is also driving the need for new, more resilient infrastructure. In the past couple of years we have had fifteen 100-year floods, which are supposed to happen every 100 years. We’re experiencing more severe flooding and more severe droughts than ever before, both of which are putting more strain on our infrastructure.”

The answer, according to Vesey and Xylem, is to engage the public and put more pressure on the government to increase funding for water infrastructural replacements and upgrades. He writes:

“Utilities need to do a better job of engaging with their communities. They need to explain the challenges and why rates are increasing. Today the cost of water is actually much lower than what people pay for their cable bill. At the same time, we need to be sensitive to different income levels. Studies show that 30 percent of US citizens struggle to pay their water bill. Utilities can deploy water meters that will help them set different pricing strategies for different income levels.”

Disclosure

Dominion holds Xylem Inc. in its Global Trends Managed Fund.


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