New Jersey\'s Water Infrastructure Asset Management

¶ … Public Infrastructure Asset Management:

Asset management has emerged as a valuable approach in the public infrastructure sector since it helps in achieving more value by using fewer resources. Public agencies are increasingly faced with the need to make decisions regarding infrastructure asset management in order to improve effectiveness. In essence, asset management is a framework that is widely accepted to seek and accomplish sustainable infrastructure. This process entails managing infrastructure capital assets to lessen the overall cost of owning and operating them while providing the desired levels of service. Therefore, asset management can basically be defined as managing a desired service level based on the intended purposes of assets at the lowest cost of the life-cycle ("Asset Management," 2012). As a result of the emergence of asset management, there are various approaches that can be taken by these agencies to enhance the effectiveness of their decisions about public infrastructure.

An example of an approach to public infrastructure asset management is the framework adopted by the New Jersey Clean Water Council for New Jersey's water infrastructure. The current approach is driven by the typical end-of-pipe regulation. While this approach is crucial for public health and environmental protection, it does not deal with infrastructure integrity directly. The existing water infrastructure for New Jersey is in need of significant repairs since its failures have attracted considerable public attention. This approach is based on deferred maintenance, which reduces costs in the short-term but inevitably increases long-term costs and causes of service disruptions. Therefore, it can be considered as a self-defeating approach to public infrastructure asset management because these long-term costs and service disruptions harm customers and the environment.

In addition, New Jersey's water infrastructure has different organizational and regulatory frameworks for supply of water, wastewater, and stormwater infrastructure for each sector. The differences in regulatory frameworks hinder effective management of existing assets because of the lack of rigorous asset management. The one-size-fits-all approach to asset management of the state's water infrastructure is unsuitable because of differences in ownership types and sizes of the systems. Actually, the framework for infrastructure management and accounting damages what already works, conflicts with existing regulatory standards, and imposes ineffective solutions for various situations (Sanchez, Goodwin & Van Abs, 2010).

As evident in this description, New Jersey's water infrastructure asset management is not based on an integrated infrastructure management approach. Since this approach does not comply with best practices in integrated infrastructure management, it is characterized with several gaps that hinder its effectiveness. One of the gaps in New Jersey's approach to asset management of water infrastructure in the lack of establishment of targets for productivity improvements and provision of performance linked incentives. The state regulator of this infrastructure has failed to adopt this best practice because the existing system only generates short-term incentives at the expense of long-term costs and causes of service disruption. The state has not implemented standardized approaches that ensure all utilities provide full account for the costs of asset management with adequate capital expenditures and reserves. Therefore, the system does not address social sustainability and focus mainly on consumers' interests.