Scaling Water Systems: How Utility Size Shapes Drinking Water Quality and Public Health

• In Event:  Caring For and About Water: Quality, Flood Risk, and Equity

Abstract

The United States has a fragmented water utility system, comprising more than 51,500 utilities nationwide. Approximately 92% of these utilities serve only 53 million Americans, while a mere 7% serve approximately 137 million (Siegel, 2019). According to the Environmental Protection Agency (EPA), nine out of ten Americans rely on public water systems for their drinking water, yet many of these systems face significant challenges in maintaining optimal water quality (Vacs Renwick et al., 2019). Utility size is primarily determined by the population served, and smaller utilities often operate with limited resources and lack economies of scale, contributing disproportionately to the more than 80,000 annual Safe Drinking Water Act (SDWA) violations (Siegel, 2019).

Although some industry groups and local stakeholders argue that governance practices and accountability are more critical than utility size, empirical evidence suggests a strong correlation between the proliferation of small water utilities and elevated risks to water quality (Allaire et al., 2018; Fu et al., 2020). These concerns become increasingly pressing when considering the potential health implications for local populations. While prior research has examined disparities in national drinking water quality and demonstrated a relationship between utility size and SDWA violations, there remains a gap in understanding how water utility fragmentation broadly affects public health, particularly among populations with heightened susceptibility, such as older adults, individuals living in rural areas, and low-income or racial minority groups.

This study aims to investigate how water utility size influences hospitalization rates across multiple demographic groups in New York State. Utilizing a longitudinal panel dataset of hospital admissions from the Healthcare Cost and Utilization Project’s State Inpatient Databases, linked to ZIP code-level water system characteristics, we estimate the extent to which smaller utilities’ higher violation rates translate into increased hospital utilization for water-related illness. A central component of this research involves examining whether the frequency and severity of these violations mediate the relationship between water utility size and health outcomes. By employing the Poisson Pseudo-Maximum Likelihood with High-Dimensional Fixed Effects (PPMLHDFE) modeling approach, the analysis will control for time-invariant local factors and potential over-dispersion in hospitalization data.

Results from this study shed light on whether, and to what extent, fragmentation among water utilities contributes to community-level health burdens. By identifying the most vulnerable subpopulations, findings can inform targeted interventions, policy reforms, and resource allocation aimed at enhancing water quality safeguards. Ultimately, this study underscores the need to reconcile local autonomy in water governance with the imperative of protecting public health, especially within the context of small systems lacking sufficient economies of scale to implement rigorous treatment and monitoring protocols.

Author

• Sarah Chung, University of Miami
  Presenting Author