The role of regulatory relationships in wastewater innovation

by Nell Green Nylen, Michael Kiparsky, and Anita Milman

Public water and wastewater utilities are increasingly struggling to fulfill society’s expectations. Their basic infrastructure is aging, budgets are tight, they usually face a barrage of stressors, from population growth to climate change and shifting regulatory expectations. What’s more, along with performing their traditional function of protecting human health and water quality, many wastewater utilities are being asked to contribute to meeting other goals. For instance: increasing water supply reliability, enhancing wildlife habitat, or meeting community energy needs.

Achieving these goals will take innovation—the event, application, diffusion, and utilization of latest technologies and management practices. Water innovation can involve latest treatment, reuse, and resource recovery technologies, including technologies that incorporate natural infrastructure. Alternatively (or as well as), innovation can take the shape of latest approaches to management, reminiscent of regional coordination, or increasing the efficiency of existing systems with latest sensors and controls or more precise models.

Nevertheless, the pace of innovation has been slow. To grasp and address the causes, for the past decade, we now have examined barriers to and enablers of innovation within the water sector. A key finding is that regulation, which is critical for shielding public and environmental health, can encourage or impede innovation.

We examined the role regulatory relationships play in determining regulation’s impact on wastewater innovation in a recent article: Cultivating effective utility-regulator relationships around innovation: Lessons from 4 case studies within the U.S. municipal wastewater sector.

Regulatory relationships and innovation

Projects that depend on latest technologies and ideas often require wastewater utilities and regulators to interact in ways in which differ from establishment regulatory interactions.

Novel technologies regularly involve different advantages, risks, and knowledge needs than those in common use—especially when utility managers intend to remodel their systems to more holistically address multiple community goals and wishes. These differences can impede regulatory approvals for revolutionary projects that, if implemented, would improve social and environmental outcomes.

Standard permit terms and conditions are crucial safeguards in traditional contexts. Nevertheless, they’re rarely geared toward supporting revolutionary approaches or the iterative, adaptive processes that could be needed to administer risks, maximize advantages, and move efficiently toward full implementation of latest technologies. Because of this, revolutionary projects may require utilities and regulators to interact in latest ways as they navigate unfamiliar technical, legal, and institutional territory. This dynamic heightens the importance of the relationships between them.

Characteristics of effective regulatory relationships around innovation

We developed a framework for understanding and improving relationships between regulators and wastewater utility managers looking for to implement revolutionary solutions. The framework draws lessons from case studies of each successful and failed attempts to implement revolutionary wastewater technologies. These case studies indicate a more collaborative and iterative approach to regulatory interactions could help to beat potential regulatory barriers.

Figure 1 depicts our conceptual model of effective regulatory relationships around innovation. The model articulates five interconnected characteristics of utility-regulator relationships that were present within the three successful case studies and lacking within the failed attempt we studied. These characteristics are clarity, capability constructing, continuity, trust, and bounded flexibility. Our evaluation suggests that appropriately applied bounded flexibility—reminiscent of using regulatory discretion to tailor permits to reflect the actual risks, advantages, and knowledge needs of the technology at issue—could also be key for enabling socially and environmentally helpful innovation.

Five boxes are shown, one for each of the 5 characteristics. Arrows connect some of the boxes to one another.The first box is for “clarity.” It says “The relationship establishes explicit and mutually understood expectations regarding the utility’s and regulator’s respective responsibilities and goals.” The second box is for “capacity building.” It says “The relationship builds knowledge and abilities for both the utility and the regulator.” The third box is for “continuity.” It says “The relationship begins early and continues throughout project development and implementation.” The fourth box is for “trust.” It says “The relationship fosters willingness by the utility and regulator to take risks in exchange for the other party’s capability and willingness to deliver on commitments, as well as public confidence in both.” Finally, the fifth box is for “bounded flexibility.” It says “The relationship maintains the ability to adjust and adapt over time, including by (1) supporting project refinement, learning, and adjustment and (2) exploring the appropriate use of regulatory discretion.”Three arrows point from the clarity box to other boxes. One arrow points to the capacity building box and says “Helps parties identify their information needs.” A second arrow point to the trust box and says “Helps parties understand one another’s goals, responsibilities, and constraints + identify areas of alignment.” The third arrow points to the bounded flexibility box and says “Helps parties identify where flexibility may be possible and beneficial.”Two arrows point from the capacity building box to other boxes. One points to the trust box and says “Builds project-specific knowledge + builds ability to deal with innovation.” The other points to the bounded flexibility box and says “Supports project refinement and adjustment.”Four arrows point from the continuity box, one to each of the other four boxes. The arrow to the clarity box says “Maintains understanding of parties’ goals and expectations.” The arrow to the capacity building box says “Supports developing and maintaining the parties’ institutional and project-specific knowledge.” The arrow to the trust box says “Demonstrates a pattern of good-faith interactions.” The arrow to the bounded flexibility box says “Enables ongoing engagement around adaptive management + regulatory discretion.”Finally, an arrow points from the trust box to the bounded flexibility box. It says “Increases willingness to use adaptive management + supports exploring regulatory discretion.” — Figure 1: Conceptual model of effective regulatory relationships around innovation, from Green Nylen et al. (2022).

Cultivating effective regulatory relationships around innovation

By working to cultivate all five characteristics of their relationships with each other, utilities and regulators can take responsibility for enabling appropriate implementation of revolutionary technologies.

But our research also demonstrates that some parties, especially small and under-resourced wastewater utilities, may find cultivating these characteristics difficult. Subsequently, sector-wide support for effective utility-regulator relationships, including coordinated regulatory and funding programs targeted to fulfill small utilities’ needs, could also be needed to bring helpful innovation close by for a lot of wastewater utilities and the communities they serve.

This work provides crucial insights concerning the interplay of regulation and innovation and the centrality of regulatory relationships in determining regulatory outcomes. It establishes the empirical and conceptual underpinnings for starting to alter the culture and behavior of each wastewater utilities and regulators to support more widespread and effective innovation.

In one other post, we’ll place this text in broader context and point the best way towards spurring motion on its insights.

This post reports on efforts to grasp the interplay of regulation and innovation within the municipal wastewater sector, funded by the US EPA and the National Science Foundation ReNUWIt Engineering Research Center.

Reference:

Green Nylen, Nell, Michael Kiparsky, and Anita Milman. 2022. Cultivating effective utility-regulator relationships around innovation: Lessons from 4 case studies within the U.S. municipal wastewater sector. PLOS Water 1(8): e0000031. https://doi.org/10.1371/journal.pwat.0000031.

bounded flexibility, effective regulatory relationships, innovation, permitting, regulatory relationships, wastewater, water quality regulation

The role of regulatory relationships in wastewater innovation