Water crisis in Jackson, Mississippi hammers home the national infrastructure plight and the challenge of addressing it. Plus: The yen continues to slide and global bonds enter their first bear market in a generation; Pakistan and Sri Lanka secure IMF loans while Russia wreaks havoc on the European energy market (price cap be damned); and new battery plant announcements and chip export restrictions in the US suggest industrial policy at work – but is it working?
This week, flooding knocked out a decaying water plant in Jackson, Mississippi, leaving over 150,000 people without drinking water. One week in, the crisis continues. President Biden has approved declaration of a state of emergency for Jackson. Mississippi will use state resources, including the National Guard, to respond. And while city officials now say that most residents should have water, additional, knock-on risks loom. Efforts to increase pressure in the city’s decaying water infrastructure could lead pipes to burst. (“We know that we have brittle pipes,” said the Jackson mayor, “we have aged pipes just as our water treatment facilities are aged.”)
Moreover, as that line suggests, Jackson’s water crisis goes well beyond the disaster of the past week. The city has faced decades of water troubles compounded by underinvestment in infrastructure, poor local management, and a stream of affluent residents leaving for the suburbs, taking utility money with them. Jackson has been under a boil-water notice for over a month, since July 30, due to high manganese levels. A 2021 winter storm left residents without water for a month after pipes burst. In 2020, the Environmental Protection Agency found that Jackson’s drinking water had the potential to host harmful bacteria or parasites. This is a systemic problem in Jackson.
Jackson’s plight also reflects a systemic problem across the United States – where decades of underinvestment in infrastructure are coming to a head, with the potential for large-scale, rippling, economic and social consequences. According to the American Society of Civil Engineers, every two minutes see a new crack somewhere in the US buried water pipe system. Since 2021, residents of Benton Harbor, Michigan have had to rely on bottled water because of high lead levels in the city’s water. Earlier this summer, floods in eastern Kentucky left some 25,000 people without water; more than a month later, thousands of customers are still being told to boil their water. And it’s not just water infrastructure, either: Remember the 2021 Texas power outage in which millions of homes and businesses were left without power for days.
With the worsening of this national infrastructure crisis has come growing recognition of it. Last fall, President Biden signed a 1.2 trillion USD infrastructure bill that included 55 billion for water systems. But for all the zeroes behind that figure, it’s likely a fraction of what the country needs. In Jackson alone, it would cost some 1 billion USD to fix the water distribution system, not to mention the broader structural issue. Plus, the devil is in the details and implementation of the federal infrastructure funding is chock-full of tough details: How is the money to be allocated and its deployment monitored; how to balance state and local needs; how to grapple with the reality that the localities most in need of government support are the same ones that can’t afford to hire application-writers? And, of course, infrastructure investment is a long-term project. Funding, no matter how much, is a future solution to a now problem – one that is literally foundational but that has no immediate answer.
Jackson risks being the canary in the coal mine. Is there an exit path?