Water Efficiency Investments Flow Into Job Creation

By Racquel Palmese

Reducing the reliance on imported water not only has environmental benefits, it also stimulates economic and job growth. This according to a new report, Economic and Job Impacts of Investments in Water Use Efficiency, which analyzes $1.2 billion of public investments in various aspects of water efficiency in the County of Los Angeles. Focusing on the economic effects of projects in stormwater retention, water conservation, recycled water, ecosystem restoration, irrigation systems repair and groundwater management, the report found that jobs paying good wages and business growth were stimulated in 38 industries and 34 occupations. In an interview with Green Technology magazine, Patrick Burns, Economic Roundtable senior researcher who co-authored the report along with Daniel Flaming, Economic Roundtable president, discusses the sometimes surprising findings and changing directions the research took.

Would you give us a little background on the Economic Roundtable?

The Economic Roundtable started out as a branch of the Los Angeles County government that was involved in carrying out research focused on economic development and job creation countywide. Way back in the day it was tied into some of the early job training partnership programs that were funded by federal dollars and administered at the county level. It also carried out research tied to looking at some of the defense industry adjustments in the downsizing of defense contracting that was happening in the late 80s and early 90s.

At that time, the country board of supervisors decided that the Roundtable needed to be an independent entity to carry out work that could potentially be critical of county policies. Ever since 1991, we’ve been a nonprofit public policy research group. While starting out with some initial defense conversion industrial strategies, we’ve branched out into a number of topics, mostly having to do with labor market information, understanding about the quantity and quality of jobs that are growing or declining in industries and understanding how there can be efforts made to boost the number of jobs locally.

Your latest report has to do with industry growth and job creation resulting from investments in water use efficiency in Los Angeles County. How did it come about?  

We have different themes and subjects that we work on, such as green technology. We create and release a report and make public presentations to interested communities, policy makers and such. The way our funding goes, and the way our interest goes, we will switch over to another topic and kind of rotate around.

After we had completed some earlier research back around 2005-06 on the subject [of green jobs], we were thinking we would want to hit this area again. In the research we were carrying out back then we were looking at a broader set of green technology companies and technologies that were emerging on the landscape. We wanted to dig a little bit deeper into this.

We had developed some contacts with the staff at the City Hall of Los Angeles who were interested in delving deeper into the economic multiplier effects of investments in water use efficiency. We started building relationships with some of the private companies, government officials and also nonprofit advocates that are working in that arena, and it kind of developed out of that synergy of relationships.

The report finds that a public investment of $1.2 billion for water conservation, graywater, recycled water, groundwater management and remediation projects created jobs in 38 industries and 34 occupations, most paying sustainable wages. Some believe that government investment is an inefficient and poor way to stimulate the economy – but how can public investment be a good way to stimulate job growth?

We had discussions on that topic with some of the nonprofit, business and government sector supporters of our research when we were pulling the last draft of the report together. The feeling amongst us was really that just about all sources of funding could potentially be very useful, but everybody in the group was acknowledging at the time that the public sector plays a very important leadership role.

Oftentimes I think when the return on investment is a little bit murky or uncertain, the public sector can play the lead in recognizing that there is a very important public need for making an investment – say a recycling plant or a rebate program that can help more gray water systems be installed in private households or commercial buildings, or a storm water program that can have an important demonstration effect not only for water capture and use, but also for having a visibility component that can spur public interest and help lay the groundwork for public-private partnerships and private investments overall.

I think that the types of facilities that are needed for our regional water infrastructure, and the ability to use our current water resources more efficiently, are oftentimes things that fall squarely in the domain of public ownership and investment.

You say that one person-year of employment is created for each $72,400 invested. The average wages for jobs in this sector can be less than that, some significantly less.  How is this a good investment? 

The way to think about it is that it’s not only the wages that go to that person, it’s a lot of the accompanying investments that go into it as well. Any type of construction jobs, or people working at an engineering firm or landscaping company – all those companies will have a significant amount of personnel overhead expenses that don’t pass through to employees’ paychecks. This is everything from insurance policies, workers comp and things like that. Also all the physical and other materials that go into the job that’s being carried out – going all the way down to the physical plant or office space that the businesses run. That $72,000 is the sum total of all types of expenses that are incurred on different projects. It takes a lot more to create a job in other industries. These are great investments because you not only stimulate the business growth leading to new jobs, you get the double benefit of all the savings accruing from using less water.

About the research itself – you focused on the economic and job impacts of investing in water efficiency projects. This would be looked at as a green jobs sector. Would you consider most of the jobs you discuss in the report to be green jobs?

I think that’s one of the things that surprised us a little bit. Heading into the research, we were thinking we wanted to have a study that focused on what are considered new green occupations. These might be jobs that haven’t really been out there in terms of the job skills and job titles associated with them. But what we found, and it kind of made sense in retrospect, was that a good number of these jobs – it’s tough to put a number on it – but I would say maybe 70 percent of these, would be considered traditional occupations that are taking on some new skills and learning about new systems.

Conventional plumbers, construction workers, landscaping workers and others are carrying out this work. For example, we were talking with one of our subject area experts on gray water systems. One of the things he was emphasizing was that there have been a lot of training programs going on, such that incumbent workers are being retrained to a greater or lesser extent to handle things like the installation of household gray water systems. The question is, are they doing a green job after they have received this training, or are they still a conventional plumber? That’s a little bit of a fuzzy area for us. We don’t really have an answer based on the report, but it’s an interesting question that emerged.

It’s an ongoing question for anyone involved in defining what are green jobs. You get to the point where you realize that there are few pure “green” jobs out there, but there are many jobs that can add green skills.

That’s exactly what occurred to us too. There are a few things that stand out. If you’re up on a platform working on a wind turbine, or maybe installing a very new type of technology or equipment like a solar panel, you could say this is a green job. But what we were encountering in the water sector was that there were people involved in technologies and work tasks that were somewhat conventional, although they were handling new stuff. If it was a water filtration plant, in a sense, making investments in that field is a green investment in my mind. But water filtration technology has been developed over a long period of time. It’s not a product of just the last few years.

Expanding on that, you talk about first and second tier industries in your report. Here again, not all the people in these industries are working on water efficiency. The first tier includes industries like those that build, operate and maintain water and sewage system infrastructure, manufacture water systems equipment and the like. The second tier industries are those that indirectly support the water sector, things like engineering services, electrical contractors, plumbers. Is there a category of “green-related jobs”? 

Anticipating your question a little bit, we’ve been a little bit frustrated in a way in being able to isolate out which of those jobs and workers and companies can be considered green companies and jobs.

In a sense, we started out with one study in mind but partway through this study we had to change direction in terms of the type of data we were finding and the type findings we were presenting. We had hoped to carry out a study that was like what you are describing – what types of jobs and companies out there can we specifically say are part of the new green sector, and what are the specific multipliers to that.

Instead of being able to isolate out those companies, we switched over to looking at projects and the actual businesses that are involved in those projects. That’s the basis for Chapter 5, which is the heart of the report. But because we had a contract in place with the City of Los Angeles to have certain deliverables and a report that talked about that first and second tier industries, in a sense that material had to remain in there.

Of the projects in Chapter 5, is there one example that stands out?

They all have some interest, but I think the stormwater ones were quite interesting because of the different scales that can be undertaken. Some are on the scale of a residential property, or an investment that’s made on a sidewalk stormwater catchment system that’s the frontage for a block of houses. But some of the other stormwater projects could be quite big, regional in scope, capturing water from after a rainfall event. With these projects, the funding comes from a couple of different levels of government, and there seems to be an interesting synergy happening in terms of the investments of time made by nonprofits and also the engineering companies’ interests in carrying out more of these as well.

Recycled water and also the groundwater remediation projects are a little more facility-oriented. That makes them interesting in that they have ongoing operations and some maintenance multipliers, maybe more so than stormwater projects.

There is a suite of activities that make water use more efficient – you mention recycling, reusing stormwater, remediating groundwater and conserving water including graywater. Is it important to highlight efforts to inform the end user about the value of all this?

Absolutely. We did cover it to a degree in the category of water conservation, which includes public awareness campaigns that are carried out in order to inform water consumers about water saving techniques, drought awareness and rebates programs that arise. That’s one of the interesting things that emerge when you look at the industrial mix of water conservation programs.

There’s a chart in the Executive Summary that looks at industries involved in each of the five categories. What makes water conservation very different is that it draws upon things like public relations companies and a lot of other types of businesses in order to carry out some of those campaigns. Some of the water conservation projects we’ve studied are about actually replacing things like low-flush toilets, that kind of thing. Others are about outreach.

That was one of the surprising things. Water conservation has all these multipliers because it’s not just delving into manufactured goods to assemble onto a site and put into the ground and achieve some water savings with, but it really drew upon a lot of different types of service sector businesses as well, and those tend to have some very interesting multipliers.

Southern California has lost some of its share of manufacturing over the years, and many types of goods are not manufactured locally anymore. But when you’re spending money in the service sector, not just for engineering services but public relations and other types of consulting businesses, those tend to have a lot of local reverberations.

This study highlights Los Angeles County, but what about the rest of California? Do you think there are lessons from this research for other places in the state?

Absolutely. I feel like the five categories of water use efficiency that were studied here include projects that could be carried out elsewhere. The model that we used to calculate multiplier effects of jobs and local business stimulated was specific to Los Angeles County, but multiplier effects won’t be radically different in other places. If there is an entity that wanted to carry out a study like this statewide for a California model, or anther county or block of counties, that could be done.

These water use efficiency investments really create multipliers that are comparable, and in some cases are better, than traditional industries that we have on the landscape already. While the water savings is an incentive unto itself for making these types of investments, the economic development and job creation multipliers are strong for these investments.

Having done this research, is there a take away message you would like to share?

Public investments in water use efficiency are very important. We all know about the droughts that the region faces periodically, the overall water shortage and the rise in population that creates demands for more water. Investments in water use efficiency and water savings conservation campaigns have really good results so far, and there’s probably a lot more potential out there to be realized. Investing in this sector is a very good thing.

Source: Green Technology