Financial Analysis of Drinking Water Systems in Shrinking Cities

Abstract

Cities around the country have declined in population over recent decades, creating numerous challenges in providing safe drinking water to their residents. In shrinking cities, fewer, poorer residents are left to pay for expensive infrastructure maintenance and upgrades. In this project, shrinking cities in Pennsylvania were used as case studies for declining cities across the nation. Traditional financial metrics show the financial health of struggling cities’ water utilities is stronger than expected. However, cities must make tradeoffs between strong financial health and their ability to maintain infrastructure and ensure affordable water bills. Pennsylvania’s state revolving fund could be better utilized to finance capital improvement projects at low interest rates, or even as grants to struggling cities. Cities and state agencies should work together to better use the financial and governance tools at their disposal to decrease the financial burden on shrinking cities while protecting public health and ensuring reliable access to safe drinking water.