Triple Bottom Line

The triple bottom line analysis is defined by the AWWA Asset Management Definitions Guidebook as “a method of assigning financial values to financial, social, and environmental factors that do not have an assigned market value, such as service interruptions to customers, noise, pollution, traffic delays, community aesthetics, consumer confidence, and public health and safety risks.” Use a triple bottom line analysis when evaluating the costs for each phase of the asset’s life cycle. The table below presents each life cycle phase and the financial, environmental, and social factors to consider when completing a triple bottom line analysis. 

Table 1 – Factors to consider when completing a Triple Bottom Line analysis

Costs and the Triple Bottom Line 

Different assets might have different impacts on the system’s financial bottom line because they might not follow the same accounting rules. Some assets depreciate, while others appreciate or maintain their value. As discussed previously in this section, gray assets are more likely to depreciate upon installation, while green assets are more likely to appreciate or maintain value over time. These two investments have different impacts on the system’s finances. The timeline for cost recovery is not the same if an asset is purchased through capital versus operational funds. The purchase budget might also impact the rates charged by the system if it charges rates. Systems should be aware of these variances when planning projects and budgets.