NCPA - National Center for Policy Analysis

Federal Water Projects Go Against The Flow

August 4, 1999

The Subcommittee on Water and Power of the House Committee on Resources is now considering the federal financing of rural water projects. These projects are controversial primarily because of the large share of the costs that the federal government would pay, say Heritage foundation analysts. Many of the newer proposed projects reflect a trend toward expansion of the Bureau of Reclamation's mission from construction to economic development and environment protection.

In the past, the federal government asked for full reimbursement for its contributions to the projects. Although many of these loans may have been forgiven or reduced, the intent is that beneficiaries of the program bear the costs of the program.

However, according to the Congressional Research Service and the General Accounting Office, for the more recent rural water supply projects, the federal share that isn't reimbursed has been higher than traditional reclamation projects -- as high as 75 percent to 85 percent or more.

The increasing federal share of water project costs runs counter to a trend toward privatization:

  • Between 7 percent and 10 percent of water supply projects in the United States are privately funded.
  • Local governments are looking to the private sector to build and maintain infrastructure projects, such as wastewater treatment plants, prisons, schools, highways, and airports.
  • And in Great Britain, 100 percent of water and water treatment facilities are privatized; and, in France, 75 percent are privatized.

Source: Angela Antonelli, "Rural Water Project Financing," Testimony before the Committee on Resources, July 29, 1999, Heritage Foundation, 214 Massachusetts Avenue, N.E., Washington, D.C. 20002, (202) 546-4400.


Browse more articles on Tax and Spending Issues