Do Property Taxes Pay Back Wastewater Infrastructure Costs?

Today, while river advocacy groups are celebrating the 40th anniversary of the Clean Water Act with Swimmable Action Day, I’m reflecting on the economics of these efforts to reduce sewage pollution.

Often when I read anything truly descriptive about what it was like to be on the historic waterfronts of New York City or Hoboken in the middle of the 20th Century, I read about the sulfurous smells of decaying, waterborne human waste.  Because the area waterways are saline and not usable for drinking water, it was actually the putrid smells that drove NYC to take the first steps toward wastewater treatment.  If you look at old waterfront buildings in NYC or places like Chicago River, they never aim toward the water because it was an open sewer — it’s clear that these were not places for luxury living.

This all gradually changed over the last half of the 20th Century, as NYC increasingly treated its sewage and improved its water quality.  So I wonder, given that our waterfronts are now focal points of city recreation, tourism and high-priced real estate — could advocates and scientists do a better job of “selling” the great benefits that the Clean Water Act has already had to the public?  Riverkeeper does a great job of defending and advocating for clean water infrastructure based on public health, and that is a relatively easy way to get people’s attention.  But when it comes to making million or even billion dollar investments in grey infrastructure (e.g. sewage treatment plants and pipelines), it has become a harder sell and people often begin to wonder if it’s worth the costs.

So, thinking purely from a government budgetary perspective, which could help motivate future investments in grey or green infrastructure — how has the economics of clean water played out?  Or specifically for cities — compared with the billions of dollars spent on infrastructure in cities like New York, what increase in tax base has come from eliminating most of the floating sewage, oxygen-deficient water, and bad smells?

This question doesn’t only look at the future of sewage pollution in the U.S., and how it can be improved, but it addresses the question for the rapidly growing urban populations of the rest of the world, many of which are just getting started — do massive investments in wastewater treatment pay for themselves purely through aesthetics, or do they also need to be justified on human and environmental grounds?  If one can prove they pay for themselves through waterfront property taxes or health improvements, it would be a powerful motivator globally for taking better care of our waste.

I did some literature searching online in the area of environmental economics, and learned how it’s difficult to study the topic because one would need to separate differing historical influences on property values.  For example, with NYC waterfronts, the move from industrial uses to residential has probably been an even larger force in raising the property tax base.  So, perhaps a starting point is to simply look at property taxes for all waterfront residences in Manhattan, and then make an assumption that some percentage of that increase is due to clean water (10%?), just to get some idea of what kind of dollars we’re talking about.

I’m guessing there might be 100,000 people living on the waterfront in NYC, with perhaps $10,000/year/person of property tax, so over a 100-year period (infrastructure lifetime) this land might raise on-the-order-of 100 billion dollars in property taxes.  Increasing this by 10% is 10 billion dollars … but this is a very simplistic analysis, of course.

Do you have access to property tax data, or can you make a back-of-the-envelope calculation?

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