[00:00:00] Speaker A: 34%. That's how much energy makes up of the total U.S. irrigation spend. In other words, irrigation isn't just about water and droughts, it's also a power story, and that's why drip irrigation systems and automation are gaining ground. This isn't a small shift either. Water management in the U.S. agriculture sector is about an $84 billion market over the next five years, according to our forecast.
Not because growers suddenly got religion about conservation, but because the fastest way to protect margins is to run pumps. Less.
I am Reece Tisdell and this is the Future of Water, in which we talk about all the ways which companies, utilities and people, all those people are addressing the challenges and opportunities in water.
This is episode 136 and I have a pretty good feeling it's going to be a good one. In fact, it might be a great one. That is because it's still January 2026 and the year is new and the Pats are going to the super bowl this week.
But more importantly, I'm joined by my Bluefield research colleague Greg Goodwin. Greg's recently released his first half 2026 review of policy shifts in the US and Canada.
There are things happening behind the scenes, from budgets, the Colorado river to earmarks, that have caught Greg's attention.
So the goal is to walk through some of the highlights and gain some perspective on at least what he sees and what these might mean for recent and looming decisions for the water and wastewater infrastructure build out going forward.
But before we get to Greg, you're going to have to bear with me just a little bit longer.
Something caught my eye this past week.
I was actually reading Bloomberg and a United nations report argues that the world has entered an era of global water bankruptcy, meaning freshwater systems in many regions have been depleted or just degraded beyond reliable recovery.
This is a step beyond what we know as water stress.
The report estimates that 75% of the global population, that's over 6 billion people, live in countries with insecure or critically insecure freshwater supplies, while another 4 billion people face severe scarcity at least one month per year.
So what are the takeaways from this news?
The bankruptcy framing is a shift or a change in how people are looking at water. Water available water supplies signals really that many basins. We're no longer talking about short term drought cycles. We're talking about structural overdraw and damage that quite honestly may not bounce back.
But groundwater is quite honestly the invisible crisis.
Roughly 50% of the world's domestic water supply comes from groundwater, and it's being Depleted because it's out of sight, out of mind. Unlike the Colorado river, most places don't have visible bathtub rings showing declines in their water supplies. So the risk is quiet until it becomes a collapse event.
Say what you want about Iran, Turkey, Mexico City, Cape Town, where water stress and mismanagement have made made plenty of headlines.
But remember, these risks have no boundaries. They're coming for you. Coming for us, too.
There is no better time to be in the water industry.
So with that, that ominous event, but like I said, a positive spin, let's get to Greg Goodwin and talk about what's happening in policies in the US And Canada and what it might mean for you going forward.
All right, so I'm joined here by Greg Goodwin. Greg, what's going on?
[00:04:07] Speaker B: Not too much, Reese.
Trying to stay warm in these times, but yourself.
[00:04:12] Speaker A: So this tells you about infrastructure, which is. Which is our business. Right. So I get on, go to the train this morning.
It's. What was the temperature this morning? Was it 5 degrees, 7 degrees? I think 5, 7 degrees. I get there, I get on the train, and it's 25 minutes late. Anyway, so I sat in the parking lot and actually worked on a research note.
As I'm doing that in the car, train pulls up, it stops. I get on the train.
We sit there for 10 minutes, and the conductor comes on and says, I'm sorry, folks, the switches are frozen on the tracks ahead.
Give us a minute. Another train's about to pass through. We'll see if that resolves the problem. And there's a chuckle and doesn't make me feel great. And so nothing happens. The conductor comes back on and says, well, folks, switch problem has not been resolved and our brakes are frozen.
So I ended up driving into the office today. That's kind of gives you an idea of the temperature. I think it's just because it's been so cold for so many days straight and doesn't seem to be going away. I think it's kind of sunk in at this point.
[00:05:23] Speaker B: Yeah, there's a. I think 35 on the forecast for Tuesday. And I don't think I've ever been excited to see 35 on a forecast is right now. So we'll feel balmy in comparison.
[00:05:34] Speaker A: Man, I hear you. I hear you. So, all right, well, let's just jump into this. And I guess just for the record, this will be the last podcast for the Patriot super bowl, so had to throw that out there. I was on with Dave McGimpsey and his water values podcast last week. And we forgot to mention super bowl, but the Pats are in the super bowl, so. And I know you're in Boston, I'm in Boston. And everybody's happy for now.
[00:06:04] Speaker B: Well, the universe has righted itself for at least people local to the area. I'm sure lots of people listening will not like that statement. But I said what I said.
[00:06:13] Speaker A: Exactly. All right, well, let's do it. Let's get at it.
All right. You've just released a semiannual policy review. In the US we do this every six months, equaling semiannual.
And there are a couple takeaways that have come out of that because there's some changes happening behind the scenes, at least in Washington as well as in Canada and even at the state level in some cases. So let's just kind of dive into it. A couple questions for you because I've thrust you into this at the last minute, but you've identified what seems to be a two speed regulatory environment. I don't know if that's the right way to put it. Where traditional pollutants get relief while PFAS enforcement seems to be intensifying. So which sectors are most exposed to the shift and what's the timeline for when the compliance costs are likely to hit or what we can expect? Any, any thoughts on that? Sure.
[00:07:11] Speaker B: So I mean, obviously this is still an ever evolving space and there's still a fair amount of uncertainty coming out of the administration and EPA statements. But at least what can kind of be sussed out now based on kind of current developments is within sort of the industrial space. The EPA has kind of revised the number of say, effluent guidelines and sort of how regulatory approaches will be targeted. So like an example of this is the meat processing standards that have not been revised since I think around 2004.
There's been a deliberate halt of basically all the aspects around that. So that would include sort of the effluent guidelines that are associated with, with meat processing.
This is all also happened with, with, with coal plants. Right. So extended compliance deadlines for, for effluent on that industrial segment as well. But there are some kind of shifts and stances around some newer industries and some pollutants that are associated with that. Right. So there's new studies that is targeting the battery manufacturing industry, certain types of oil and gas extraction processing of indust PFOs. So you know, it does seem to be a slight bifurcation of how certain industries are being treated by the EPA at large. And you know, those effluent rules are expected to be sometime this year. So compliance costs eventually being kind of shifting more to some of these newer players in industry, while legacy players are sort of given a little bit more of a, of a Runway to kind of comply with with, you know, different types of measures that the EPA's put on them. So that's definitely, you know, a dynamic that's starting to emerge or has emerged to some degree over the last year or so. In terms of the stance of epa.
[00:09:18] Speaker A: I mean, this is out of the administration. Are they picking and choosing based on constituencies and lobbyists? I can, I only assume that, I.
[00:09:28] Speaker B: Mean, to some degree that's probably involved. I mean, I think this administration has been fairly overt in terms of what types of industries they think are important for the economy at large and what's strategic and so forth in terms of kind of traditional energy and coal, that sort of thing. So I would assume that that plays into this to some degree, if not a large degree.
[00:09:53] Speaker A: All right, well, let's shift gears into the sort of looking at some states and what's happening. So the elimination of state section 401 authority seems to be a pretty big deal. This impacts California, New York.
So yeah. What does that mean?
[00:10:09] Speaker B: Yeah, so I think this is something that has not gotten a ton of attention so far, but could potentially be fairly important moving forward. So in, in conjunction with. So basically the, the waters of the United States definition legally is different after sort of the Supreme Court ruling on it, you know, I think is that maybe two years ago at this point. So what is covered under the Clean Water act essentially is less extensive than it would have been a number of years ago based on how WOTUS is defined.
And then there is a bill that has passed the House. I don't think it's passed the Senate yet, but basically it is known as the Permit Act. And it's essentially to kind of change the way that permits can be reviewed and challenged by state and tribal authorities. So I mean, essentially at large, it's kind of a negation of the federal principle here in terms of what states can do. So it basically under section 401 of the Clean Water act, that has typically allowed states and tribal authorities to challenge projects that are going to be located within their state if they contradict with state level regulations for water quality and so forth. And so this move to this specific law, if it passes, would be to basically eliminate that tool. So this is something that's been used fairly extensively in states such as California, New York that are politically probably more likely to be oriented towards higher regulatory standards and have a lot of both land and sort of economic activity. So I think some watchers are looking at it as something that sort of targets those types of states in general, but basically they will not be able to hold up massive projects that might be set to occur within their state boundaries.
[00:12:03] Speaker A: Interesting. All right, so we'll continue to see how that evolves. And then the next point I wanted to bring up as part of your semiannual review is of all things Colorado river, it feels like we could have been talking about this for the last 50 years or longer.
So let's just talk a little bit about seven basin states. They miss a November deadline and There is a February 14th deadline or a hard stop before federal intervention. We've been down this path before. What's the story with Colorado river and what should we be thinking about?
[00:12:39] Speaker B: Yeah, and so apologies.
I believe that there is currently, like right at this moment, a kind of a retreat of sorts that Doug Burgum has dragged all these different state level regulators and sort of representatives to in Vegas or someplace out west to talk this over over the weekend. There is a February 14th hard stop where states are supposed to make some sort of framework agreement before actual federal invention from the Bureau of Reclamation actually steps in. So if they don't hit this deadline on February 14, theoretically that means that the federal government now actually takes concrete actions to start outlaying plans that they may have to start really considering for kind of resolution of this. Whether that actually happens, I'm not entirely certain. I mean, I think we've heard certain threats, similar threats that had been made in the past around sort of, you really have to do it for this deadline. But February 14th is now the next date. And so, yeah, so just in terms of that background, the amount of allocation for upper and lower states is based on assumptions that are no longer the case in terms of yearly average supply. The lower basin states think it should be that the upper basin states are the ones that.
Or that the, the cutback should, should be shared across the upper basin states. Say we don't even use what we're allocated, so we should not have to do that. So there's kind of an impasse around sort of almost philosophically who should have to, you know, bear the brunt of the, of the cutback or how that's sort of shared. So yeah, it's to your point though, Reese. It's a, it's not a new issue and it's something where there's, you know, this has been A ratchet that's tightening over the last several years and is now kind of the last thread to turn on, I guess.
[00:14:37] Speaker A: Yeah, I think, you know, the Biden administration, maybe it was in the last year it said, hey, we need to, there was a deadline then and we sailed past it. If anybody could, you know, lash back with a deadline or some authoritarian pressure, it could be the Trump administration. Not to guess I shouldn't chuckle about that, but is one thing is, is that over the holidays when I was reading through some notes on this and there's a point where we should just probably in maybe the seven basin states relying on the Colorado, probably just pretend the Colorado river just didn't exist. What would they do differently? Right. There's this, we're hanging on to this resource which I'm not to say it's not valuable is crazy. But the reality of it is technology exists. There's reuse, there's desalination. There are water efficiency measures that can be taken both in agriculture is our agriculture soon to be released agricultural report will tell, but also in other ways it's available is my point. And so, you know, this is, I don't know, I don't have another way to put it. Frustrating. Maybe that's it.
[00:15:51] Speaker B: Yeah. Obviously not a, a foreseeable problem. I guess we could say it's just incentives involved and so forth have sort of led us to this path where there's, you know, kind of at a bottleneck. But yeah, there are other considerations too that have been brought up by various parties around say the hydropower that's associated with the, with the two key dams that, that's, you know, below a certain, where you get to a dead pool level within sort of the, the reservoirs those are not that that power will no longer be available.
But to your point, there are, you know, various sort of efficiency measures that can be applied within the network that are also important considerations to, you know, long term shoring up of supply and so forth. So definitely portends to opportunities within there because that's happening anyway. Right. And also, I mean the states, I think, I don't think anybody wants really for the federal government to really be the one imposing this or for this to get to like a full litigation stage because that just, it's just a path that I think people would rather not find themselves on.
[00:17:00] Speaker A: Yeah. So that's where we are as far as the next question I have, and maybe it's partly because Mark Carney is in the news, but Canada, Canada seems to be flipping the script a little Bit There seems to be some dollars hitting the streets for water capacity even before demand arrives, tied to housing targets and such.
What's happening in Canada?
[00:17:25] Speaker B: Yeah, so within Canada, I mean partially based on how the relationship with the US has kind of evolved, if that's the word you want to use, over the last year in particular, there's definitely a decoupling effort in terms of being less reliant on the US economy trade with the US doing things internally. So there's been a number of high level initiatives out of Ottawa to invest pretty broadly both within the municipal housing segment.
A lot of that focused on the greater Ontario area in terms of where there's shortages and a necessity for new build. But also like strategic industries like energy extraction, mining and so forth that there's been pretty significant money that's being thrown at. So I think there's about 40 billion US that's US dollars there for improved water, wastewater and transit systems.
A lot of that will trickle down into sort of the housing and municipal sector.
And then in sort of an administrative sense they're creating more centralized agencies across provincial sort of way of working. There's a major project's office which is basically it's to try to expedite approval for permitting for the process to kind of actually get projects moving where they're trying to get it like under two years to do some of these large strategic projects. So it seems pretty long term in thinking. And I believe the budget that they just passed is the largest deficit they've incurred outside of COVID So they're definitely looking at this as a longer term that this sort of relationship with the US is at least for the foreseeable future. This is the way that things have to kind of evolve in terms of know what kind of investments they're going to make internally and how that plays out.
[00:19:28] Speaker A: Yeah. And nothing happens overnight. So if it's long term planning, I. I get it.
One last question for you before I let you go. And that is the budget, the EPA budget. There's some signs that that has been passed or approved.
Where are we on that?
[00:19:45] Speaker B: Yeah, so again that a lot of this I think is happening today or yesterday. Today was the last day of the continuing resolution from back in the end of September, I believe the appropriations bill that includes most of the water spend was passed. I think that is 8.8 billion for EPA. So it's essentially it's a slight cut, but much, much less than what the White House was requesting back in June of last year. I think it's between 3 and 4% as a top line number.
And then when we look at the main municipal coffers that are usually of interest, so the SRF funds for clean water and drinking water, those are about the same. In terms of the amount of spending that's going to be put in each, I think it's between, it's a little under 3 billion on each side.
I think what's interesting about that though is the evolution of more and more of that spending is congressionally directed. So earmarks essentially award as grants from individual, from Congress to individual projects instead of going through the state sort of subawardee process where they kind of will decide where that goes. So long term that does kind of raise some questions about the viability of the loan mechanism. The whole revolving part of it, this being a below interest loan where states are depositing money back into the coffers and it sort of self perpetuates if there's more and more of the money that's just kind of awarded as grants, it sort of undermines that mechanism to some degree. So long term it could show that states need to think about this probably more independently for their own internal planning than how the program has historically been run for, you know, the last decade before and since its inception. I think in sort of the mid-80s.
[00:21:44] Speaker A: Yeah, I think the earmarks are a real problem and it's a good question where.
And we haven't done this analysis, I don't believe. But where are those earmarks happening? Is it in certain states versus others? Because some states are very ambitious or aggressive, for lack of a better way to put it, and how they allocate and deploy and prioritize state revolving fund dollars. Ohio stands out in my mind where some states don't even fully utilize them and they're used. I don't want to call it a slush fund, but that's essentially what they become if they're, if it's earmarked.
[00:22:20] Speaker B: Yeah, I've seen a couple of headlines just on some of the very large projects that probably got the largest individual dollar figures around that. And I think some of those were in say like Texas and maybe some of the larger states as well that have kind of larger source water or kind of scarcity issues.
But that's an analysis I think. Yeah, we probably need to dig into a little bit more of as these, as earmarks have come back post 2022. How has that really looked in terms of where the money goes on a state level compared to when the allocations are more, more or Less done proportionally or through that the typical process for srf. So definitely something that we kind of have on the list to look into more deeply.
[00:23:05] Speaker A: Yeah, no, I look forward to that. I know that's on our deliverable calendar for the year. And so just looking at all federal funding, which states are getting what, where, when and how. So look forward to that. All right, well, Greg, last minute, I know I squeezed you in between a couple different things, calls, et cetera. So thanks for jumping on last minute and good work on the semi annual review of water policy in the U.S. which is available through our municipal U.S. and Canada municipal Water Insight service or corporate subscription is another way to put it. All right, well, that being said, I'll let you go unless you got anything else to add other than gopats.
[00:23:44] Speaker B: Well, that was the last thing I was going to say, but I guess that's implied. All right, thanks a lot, Rhys.
[00:23:48] Speaker A: Take care. Cheers.
[00:23:49] Speaker B: Bye.
[00:23:52] Speaker A: All right, that was great having Greg on. Super well informed. He lives for this stuff. Truth be told, for those clients and others who've worked with Greg through his time at Bluefield Research, this is the one thing that I think he wakes up and lives for, and that is policy out of Washington and understanding the ins and outs of how the sausage is being made.
So if you're interested in that, you can always go to our website and take a look at the policy review that he puts out. And we also put one out at the same time in Europe as well.
My colleagues, Chloe Meyer, Maria Cardinal are focused on that. So.
All right, well, that's it. Before we sign off, I want to recognize the team that makes this possible. Mike Gaylor, Ryan Sullivan, Kelly Talbot, Steph Aldock.
Without them, this doesn't happen.
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