Financing Conservation: Texas’ Water Infrastructure Bank and the 20 Percent Set-Aside

Abstract

In the early 2010s, Texas suffered a historic drought that drew attention to the long-term limits and vulnerabilities of its water system and that prompted the state legislature, in its 2013 session, to take on water as one of its key policy issues. With near unanimity, the Legislature passed a package of bills that – with voter approval, in the form of Proposition 6 – created a new water infrastructure bank, the State Water Implementation Fund for Texas (SWIFT). SWIFT is intended to provide the state-level financial assistance that water utilities had previously estimated they needed to implement the water strategies recommended in the State Water Plan (SWP). The legislature capitalized SWIFT with a $2 billion appropriation and established a set-aside – codified at Texas Water §15.434(b)(2) – that requires twenty percent of SWIFT monies go toward SWP strategies for conservation or reuse. This set-aside helped to win support for SWIFT and Proposition 6 among environmentalists and other stakeholders potentially wary of new large-scale infrastructure projects. The Texas Water Development Board (TWDB) has been tasked with implementing SWIFT and the set-aside according to a statutorily mandated schedule. In this white paper, the Center for Global Energy, International Arbitration and Environmental Law at The University of Texas School of Law (Energy Center) identifies the most important challenges that the agency will face in doing so.