A recent report by Milliman, a global consulting and actuarial firm, has revealed an estimate of the economic liability associated with the remediation of perfluoroalkyl and polyfluoroalkyl substances (PFAS) in U.S. water districts.
Employing a sophisticated stochastic modelling approach, Milliman projects that the total remediation expenses for PFAS contamination in drinking water systems could range from $120 billion to $175 billion.
PFAS, also known as "forever chemicals" due to their persistence in the environment, have been linked to serious health issues, including cancer, liver damage, and endocrine disruption. In response to these concerns, the Environmental Protection Agency (EPA) has set new maximum contaminant levels (MCLs) for several PFAS compounds in drinking water, spurring nationwide efforts among water districts to test and decontaminate their supplies.
"Milliman's comprehensive modeling provides a robust framework for understanding the significant financial implications of PFAS contamination," said Travis Grulkowski, Principal and Consulting Actuary at Milliman. Milliman's model incorporates a range of variables, including geospatial, regulatory, and industry data, to produce individualized estimates for over 140,000 U.S. water districts. The estimates account for the presence of approximately 30 different PFAS compounds and consider the unique risks and remediation needs of each district.
"Our approach not only estimates the potential costs but provides insurers and corporations with the tools to navigate this complex landscape," said Drew Groth, Associate Actuary at Milliman. “The granularity of the model coupled with probabilistic outcomes allows the user to integrate the estimates into various analyses, including enterprise risk management, underwriting, pricing, and reserving.”
The report underscores the financial burden facing water districts striving to comply with regulatory standards and the pressing need for potentially responsible parties to understand their potential share of remediation costs. Although federal and state funds will provide some support, the anticipated expenses far outstrip current resources, necessitating alternative funding strategies or legal actions to recover costs.
