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Aging Water Infrastructure Means More Municipal Capex 

Grassroots Research 

 

5/10/2017 

Aging US water infrastructure translates to increased municipal spending in 2017, focusing on replacements rather than repairs, and a commitment to follow through on planned investments. Grassroots℠ Research shows that this trend is likely to continue.
None of our sources canceled or delayed any planned investments in water infrastructure in the past six months.
Interviews with officials in charge of, or familiar with, local water infrastructure for municipalities in the US revealed that budgets/spending intentions for water infrastructure for 2017 are up vs. 2016 for three-fifths due to the age of the infrastructure necessitating more replacements than repairs, and the general availability of more funding through rate hikes and/or revenue bonds and state loans. However, budgets/spending intentions are flat for slightly more than one-third of sources, who said funding remains the same and ongoing projects are moving forward, with officials highlighting the general need for more/higher spending in the future; and down for one due to an expensive, special project completed last year.

Meanwhile, no sources canceled or delayed any planned investments in water infrastructure in the past six months, noting that only something
More-intensive projects are planned and more funding will be available due to the age of the infrastructure requiring upgrades.
extraordinary or a lack of funding would cause such actions. All continued with planned investments in replacements, repairs, and technology upgrades, frequently noting that if they do not spend what is budgeted, they do not get to roll it over to the next year's budget.

Looking ahead, slightly more than half of sources expect an increase in their investment needs for water infrastructure in the next three years, as more-intensive projects are planned and more funding will be available due to the age of the infrastructure requiring upgrades, while slightly more than one-third said it likely will remain unchanged, as funding probably will remain the same and no major needs are foreseen beyond what currently is underway.



GrassrootsSM Research is a division of Allianz Global Investors that commissions investigative market research for asset-management professionals. Research data used to generate GrassrootsSM Research reports are received from reporters and Field Force investigators, who work as independent, third-party contractors, as well as external research panel providers—all of whom supply research that may be paid for by commissions generated by trades executed on behalf of clients. We believe these sources of information to be reliable and are providing the information in good faith, but in no way warrant the accuracy or completeness of the information. We have no obligation to update, modify or amend this document or to otherwise notify you in the event that any matter set forth in this document changes or subsequently becomes inaccurate. In addition, information may be available that is not reflected at this time. We accept no liability whatsoever for any direct or consequential loss or damage arising from your use of the information contained in this document. We and our affiliates, officers, employees or clients may effect or have effected transactions for our or their own accounts in the securities mentioned here or in any related investments. The information provided in this document is provided for informational purposes only and shall not be considered investment advice. Any reference to a particular company shall not be considered an offer to sell, the solicitation of an offer to buy or a recommendation to buy, sell, or hold any security issued by such company. No part of this material may be i) copied, photocopied, or duplicated in any form, by any means, or ii) redistributed without prior written consent.


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