Capital Goods - April 2008

North Carolina's dry heaves
By Scott Mooneyham

Landscapers and lawn-care companies feel picked on these days. They really shouldn’t. They may soon have plenty of company when it comes to how water, or the lack thereof, affects businesses in North Carolina.

The ongoing drought, and local water suppliers’ response to it, obviously has been the big problem for landscapers. Outdoor watering restrictions, most prevalent in the Piedmont, have caused landscapers to lay off 30% of their more than 150,000 workers statewide, according to an industry estimate. Their plight has led many to complain that other businesses, from soft-drink bottlers to Duke Energy, haven’t been forced to cut back usage while landscapers and their customers have been required to halt watering in some cities. Then again, no one ever froze to death because of a brown lawn.

But the reason landscapers won’t be the only ones singing the low-water blues is that state policymakers are beginning to look beyond this drought — which eventually will end, hopefully sooner rather than later. Leaders have started thinking about how North Carolina will manage water in the face of growth that is expected to push the population to 12 million people, nearly a 50% increase, by 2030. Even before the drought was in full swing, state legislators were planning a long-term study to examine water-allocation issues. It likely will be another year before the study is complete, and then we’ll have to see where political will and political reality meet. But based on the response to the drought and a few other clues, some indicators of what might be in store already are out there.

Some potential changes — such as more interconnections of water systems and incentives or even mandates designed to bring about larger, regional systems — won’t have a direct, immediate impact on most businesses. But Sen. Dan Clodfelter believes that larger, more efficient water utilities are critical for North Carolina to continue to grow and to thrive. The Charlotte Democrat, who co-chairs the Environmental Review Commission, says he doubts that his hometown would be the economic engine it is today without the foresight of local leaders in the 1950s who created a regional water-and-sewer system.

“If you were starting from scratch now, you’d never duplicate what you have now,” Clodfelter says. “If everyone who wants to fly a plane tried to build an airport, no one would be able to afford to fly. A resource requires a certain amount of efficiency. But with water, that’s not what we’re doing.”

If communities across North Carolina provide water more efficiently, industry executives and business owners will applaud. But what if the response includes toughening residential and commercial building standards to require more efficient — and more expensive — plumbing fixtures? What about requirements that industrial and commercial buildings capture rainwater from roofs for lawn irrigation? How about development standards that limit the percentage of a residential lot that could be planted with grasses that are not drought-resistant? What about mandates for tiered water rates in which large users pay sig­nificantly more when they reach certain volume thresholds?

All these suggestions have been mentioned in recent water-related reports or by influential legislators. Senate President Pro Tem Marc Basnight has been a champion of capturing rainwater from roofs in cisterns, even putting a cistern system in place at the Legislative Building. In an interview late last year, the Dare County Democrat mentioned the possibility of a similar state requirement for new commercial buildings. Basnight also pushed a proposal last year that would have placed limits on impervious surfaces in new parking lots, a measure rejected by House budget negotiators.

Not that all, or necessarily any, of these ideas will make it into the study recommendations likely to be considered by legislators in 2009. (The drought, though, will certainly create political pressure for some measured, incremental action later this year, prior to the issuance of the legislature’s mandated study.) Still, if you believe these kinds of proposals are likely to fade as the drought eases, consider that demand for water is estimated to rise by more than 75% in major portions of 20 North Carolina counties by 2030. The same analysis from the N.C. Rural Economic Development Center shows demand rising at least 25% in substantial portions of 41 counties within 22 years.

And which counties are expected to see the biggest increase in demand? Mostly, they’re the same Piedmont counties that already have been experiencing tremendous growth, particularly the ones that include bedroom communities of major cities. So, drought or no drought, the days of abundant, cheap water in North Carolina are coming to an end. The pressure to conserve, to become more efficient water consumers, is only going to increase, no matter how many April showers bring May flowers.

Scott Mooneyham is the editor of The Insider, www.ncinsider.com.

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