Written by Michael Kieffer
The Flint water crisis began in the city of Flint, Michigan in 2014 and it’s regarded as one of the largest public health emergencies that the state of Michigan has ever encountered. The crisis began when the city of Flint switched its source of drinking water. The city had originally purchased its water from the Detroit Water and Sewage Department (DWSD) (Kennedy 2016), but they saw an opportunity to save money on drinking water by switching to the Karegnondi Water Authority. The city projected savings of up to $200 million within the next 25 years by making the switch, but they still needed to build a functional pipeline to KWA. In the meantime, Flint’s contract with DWSD ran out in 2014, and they needed to find a new source of water in the interim. The city decided to switch to the nearby Flint River as a source of drinking water. Within the next year, the city received many complaints about the quality of water that it was providing its citizens. Multiple tests of the drinking water showed high levels of lead and other dangerous substances.
What followed was a period of unrest in the city, countless lawsuits, and a nationally covered story. While there is much to be argued about the government’s handling of this crisis, this article aims to analyze the overall financial impact of the Flint water crisis. The crisis impacted many parties financially including the national and state governments, local businesses, and residents within the city.
The Flint water crisis financially impacted our country on a national level (EPA 2020). The federal government realized the severity of the crisis, and decided that it would be best to allocate taxpayer dollars to help shore up the situation. This funding was granted to the city of Flint through the Environmental Protection Agency (EPA). In 2016, the agency gave the city of
Flint $100 million in order to improve the drinking water for the citizens. To ensure that their funding was positively impacting the water quality, the EPA closely monitored the progress that was being made. They did this by constantly monitoring and testing the water quality to make sure that lead levels were declining.
In addition to federal funding for the water crisis, the city of Flint also received state financing (Flint Water 2020). The water crisis cost the state of Michigan over 350 million dollars. The state worked to add this funding to its budget in order to both improve the water quality, and provide residents with safe alternatives to drinking the unhealthy water. According to the state’s website, much of this funding was spent on replacing the unsafe pipe that led to the water’s contamination. The state also worked to give residents of Flint bottled water instead of the unsafe water. Residents who lived in Flint were granted free bottled water as part of the state’s funding program. Water distribution sites were set up all around the city. By proving that they lived in Flint, residents were eligible to pick up free bottled water from any of these sites. Another component of the state funding program was water filters that helped to purify the water so that harmful substances like lead are removed. Residents were eligible to receive free replacement filters as well. The state funding program also granted free water testing kits to city residents. These kits help to ensure that water is safe to drink and meets federal requirements for lead levels.
In addition to relief funding, the state of Michigan owes a large settlement fund to victims of the crisis (Bosman 2020). The settlement fund totals 600 million dollars in value. Approximately 80 percent of the settlement fund will be given to children because they are the most heavily affected by the crisis. Health experts say that lead poisoning greatly harms developmental growth in young children.
Not only did the water crisis adversely affect the federal and state governments, it also had negative financial effects on the city itself. Research suggests that the Flint water crisis greatly harmed the housing market in the city of Flint (Debaere 2019). Values of homes experienced a sharp decline when the crisis occurred, further harming a city that was already struggling financially. Economist David Keiser says that the decrease in the housing market can be attributed to the low desirability of living in a city with unsafe water. The crisis harmed local businesses as well, contributing to an even larger economic downturn (Emery 2016). Flint small businesses were eligible to seek aid from the Small Business Administration as a result of the issue.
The Flint water crisis had many financial impacts, ranging from the federal to local level. It cost the federal and state governments millions in aid and settlement funds. It also harmed local businesses and residents economically, as can be observed by the drop in local housing value and the relief plan awarded by the Small Business Administration. What began as an attempt by the city of Flint to save money on water turned out to be a crisis that ended up costing millions of dollars and harming residents.
Works Cited
Bosman, Julie. “Michigan to Pay $600 Million to Victims of Flint Water Crisis.” The New York Times, The New York Times, 20 Aug. 2020,
www.nytimes.com/2020/08/19/us/flint-water-crisis-settlement.html.
Debaere, Peter. “Q&A With David Keiser about the Economic Impact of Flint’s Water Crisis.” Global Water Blog, 2019,
blogs.darden.virginia.edu/globalwater/2019/06/03/qa-with-david-keiser-about-the-econo mic-impact-of-flints-water-crisis/.
Emery, Amanda. “Businesses Affected by Flint Water Crisis Can Seek Disaster Loans from SBA.” Mlive, 6 Feb. 2016,
www.mlive.com/news/flint/2016/02/businesses_affected_by_flint_w.html.
“Flint Drinking Water Response.” EPA, Environmental Protection Agency, 13 Oct. 2020, www.epa.gov/flint.
“Flint Water.” Flint Water – Taking Action on Flint Water, 13 Oct. 2020, www.michigan.gov/flintwater/.
Kennedy, Merrit. “Lead-Laced Water In Flint: A Step-By-Step Look At The Makings Of A Crisis.” NPR, NPR, 20 Apr. 2016,
www.npr.org/sections/thetwo-way/2016/04/20/465545378/lead-laced-water-in-flint-a-ste p-by-step-look-at-the-makings-of-a-crisis.