New financing methods and flexible pricing are key to revamping the nation’s outdated water systems, according to a new report. The report, “Financing Sustainable Water Infrastructure,” says water management officials must rely less on state and federal funding and more on “market-based financing mechanisms that can support local, customer-supported solutions,” according to a news release.

The report also faults “myopic, inflexible water-pricing systems that fail to distinguish between various water uses and generally undervalue water.” The report was issued by Racine, Wis.-based The Johnson Foundation, in collaboration with the Washington-based American Rivers and Boston-based Ceres organizations.

Most water systems in the United States were built during the 19th and early 20th centuries. The report says about 6 billion gallons of treated water – 14 percent of the nation’s daily water use – is lost each day in the United States because of leaky and aging pipes. The American Society of Civil Engineers rates the nation’s water systems at D-minus, the lowest grade of any infrastructure, including roads and bridges, according to the news release.

“This report makes clear that our nation’s water infrastructure is broken and dramatic changes are needed,” Sharlene Leurig, Ceres’ senior manager of water and insurance programs, said in a statement. “Rethinking how we finance and operate our vast water systems is not a choice, it’s a must.”

In addition to new financing solutions, the report recommends making local water systems more efficient with green infrastructure and recycling, as well as flexible pricing to “distinguish between drinking water and various other types of water, such as lawn water and toilet water.”

The water financing report is part of The Johnson Foundation’s “Charting New Waters” initiative launched in 2010. The initiative includes a series of Regional Freshwater Forums to convene water experts.  To learn more about the initiative, go to the foundation’s website