Investing in Michigan’s Water Infrastructure – An Economic Opportunity
PROTECTING THE ECONOMY, CREATING NEW JOBS, AND DRIVING GROWTH
Michigan has for decades underinvested in its water infrastructure at the expense of the economy and the health of families in the state. To ensure Michigan’s economy continues to grow — and that all Michiganders enjoy a high quality of life — this gap should be closed.
Fortunately, investing an additional $12.2 billion in Michigan’s own water infrastructure needs on top of existing expenditures would over the next two decades help create nearly 90,000 direct job-years in multiple industries — including good jobs for veterans — while generating about $441.3 million in additional earned income for state residents annually.
This essential spending would also help businesses in the state’s water services industry become national leaders in developing and commercializing new water technologies, just as early-mover states like California have become national leaders in clean tech. And it would ensure that all Michigan industries, whether they are directly or indirectly reliant on clean, affordable water, are in the best position possible for decades of ongoing growth.
But first, we must fix the system.
REPORT TOPLINES
- $12 billion in new spending is needed to update critical water infrastructure in Michigan and avoid more long-term economic and health damage to the state
- New expenditures directly lead to the creation of 89,880 full-time job-years
- Those 90,000 direct jobs would generate $8.8 billion in new wages workers and their families can inject into their local economies
- New jobs and wages will generate $694 million in total tax revenue over two decades, with more than 80 percent going to local and state municipalities ($560 million)
- Michigan is currently spending $22,000 a day on bottled water for Flint, Michigan alone. Continuing to underfund and defer critical maintenance improvements to water systems across the state risks similar impacts in other cities.
- While the cost of improving Michigan’s safe drinking water systems is greater than the direct economic benefits, this report focuses only on one small piece of the economic benefits – the direct additional jobs and spending. E2 and BW Research did not analyze indirect or induced benefits like improved health outcomes for citizens, long-term benefits on younger populations, and economic activity created by improving clean water access for businesses.
METHODOLOGY
For the jobs, income and tax revenue data, E2 contracted BW Research which used the Emsi Input-Output model that traces spending and infrastructural developments through the economy to determine the economic impact of the change in water infrastructure spending in the state of Michigan.45
The cumulative effects of the initial job change are quantified and the results are categorized into direct, indirect and induced effects.
- Direct effects show the change in the economy associated with the initial job creation (or loss), or how the industry experiences the change (i.e., workers digging ditches to replace pipe).
- Indirect effects include all the backward linkages, or the supply chain responses as a result of the initial job change (i.e., water pipe manufacturers).
- Induced effects refer to household spending and are the result of workers who are responsible for the direct and indirect effects spending their wages (i.e., direct and indirect workers spend income on clothes, food, healthcare, etc.).
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