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Privatizing Sewage Treatment

April 2, 2008

From the local paper this morning, a story about the growing trend of new housing developments providing their own sewage treatment facilities on-site. Excerpt:

Homebuyers like knowing their rates are protected, particularly in Jefferson County, where county sewer system rates have shot up 329 percent since 1997. Homeowners also like the idea that they won't be stuck holding an unpleasant, but crucial, asset if the plant operator goes out of business, home builders and regulators say.
Developers like access to rural land that doesn't have a nearby sewer system, and environmentalists say on-site sewage treatment, properly regulated, can be preferable to discharging into streams.
"My opinion is in 10 years this will be the primary way domestic wastewater is handled in the country," said Jimmy Coles, director of community environmental protection at the Alabama Department of Public Health. "If you're treating it closer to the source, it's cheaper. The old model is to pump that stuff miles and put it in the creek. The new model is treating and dispersing it closer to the source."

In other words, regulators are now allowing developers to internalize these costs, based on their own inabilities to satisfy demands associated with continued growth. As municipalities become more strapped for cash, as their debt levels rise, and as populations shift, we should see more such efforts to satisfy consumer demands absent municipal provision of so-called public goods. Often, all that is required is adjusting regulation to allow them to take place.

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