Beyond The Replacement Era
AWWA’s new infrastructure report investigates balancing compounding infrastructure needs with household affordability.
Beyond The Replacement Era
While Infrastructure Costs Grow, Household Water Becomes Unaffordable
Drinking water utilities are being left behind, despite the growing needs placed upon them by new and existing regulations, ageing infrastructure, inflation, and increased risks from weather events and climate change-related burdens. Without federal assistance, the brunt of these increased costs will flow directly to consumers, despite the already very high cost of living in most US states. The funding gap for water utilities is already $60 billion and is expected to increase significantly by 2050.
The compounding costs on water utilities have created a financial burden that has overwhelmed the current rate-based funding model. With total annual spending needs in the sector expected to reach $200 billion by 2050, relying on rate increases to close the funding gap imposes an unsustainable and untenable burden on consumers, potentially leaving 76 million households water-burdened.
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The Funding Gap
Right now, there is a $33 billion federal allotment for water utilities. There is a need for $90 billion. This represents a $56.6 billion funding gap as of the publication of this report. It is estimated to grow to $200 billion by 2050. The projected additional drinking water utility spending by 2050 will be 76 times higher than the current funding levels.
Closing the Gap
Drinking water utility consumer fees and revenues are the primary source of funding for utility expenses. As a result, this structure places the financial burden of capital improvements squarely on the rate payer. Federal programs that assist or fully fund capital projects can lessen this burden.
Available Funds:
- Drinking Water State Revolving Loan Fund (DWSRF)
- Water Infrastructure Finance and Innovation Act (WIFIA)
- Community Development Block Grant (CDBG)
- Rural Water and Environmental Programs (WEP)
While many federal programs support water infrastructure projects, priorities and eligibility vary by funding source.
Operations and maintenance costs are steadily increasing due to inflation and the rising cost of infrastructure maintenance. The baseline cost of delivering water is rising faster than general inflation.
Infrastructure Investment and Jobs Act
The IIJA invested $55 billion over a five-year period, beginning in 2021. It is set to expire in 2026. This act is the largest single federal investment in water infrastructure in U.S. history. Congressional debates about reducing water infrastructure programs on a federal level have caused a lot of uncertainty about the future of this program after this year. As of right now, there is no plan to extend it.
Water Utilities Receive Less Federal Aid than Any Other Major Class of Infrastructure
Despite water utilities counting as the second-largest infrastructure sector in the United States by expenditures, they receive the lowest level of federal support. Water utility infrastructure accounted for just 3.9% of total federal spending.
State and local funding for water utilities vastly outweighs federal spending for drinking water infrastructure (<90% higher as of 2014).
Affordability Impacts
Beyond the Replacement Era defines water affordability as: “The ability of the customer to pay the water bill in full and on time without jeopardizing their ability to pay for other essential expenses.”
15 %
of U.S. households currently struggle to afford water.
132 %
is how much the cost of water has increased since 2004.
10.2
million households were water-burdened in 2025.
126 %
is the expected increase to annual water bills without federal funding by 2050.
13.6
billion is how much it would cost in 2025 dollars to subsidize the amount of water-burdened households anticipated by 2050.
Utility Burdens
Along with the cost of replacing ageing infrastructure assets and updating internal systems, utilities are also facing emerging financial stressors. Some federal assistance programs for utilities are already in place, such as WFIA, the DWSRF, and the ILJA. However, with these programs currently threatened at a federal level, the future of federal funding for drinking water utilities and consumer assistance programs remains unclear.
Compliance
New regulations surrounding PFAS and lead service line replacement are requiring utilities to spend more on top of existing regulations.
- PFAS treatment often requires new, expensive equipment and staff to manage it with a compliance deadline in 2029
- LSL replacement costs $12,000 per household, with a compliance deadline in 2037
Complexity
Many utilities are still struggling to maintain old infrastructure with the money they have. Upgrading their facilities to accommodate new, often more difficult to treat, water sources is expensive, time-consuming, and labor-intensive.
Utilities, driven by climate change and population growth, will have to begin looking for alternative sources of drinking water. This can come in the form of:
- Desalination
- Potable reuse systems
- Reverse Osmosis
- Source Water Diversification/Local Resource Development
Resilience
Investments in resilience are not only good for the utility, but they are also good for the community.
- Pre-emptive investment in system hardening and capacity expansion is crucial for maintaining drinking water service during weather events such as fires, floods, and droughts.
- Cybersecurity breaches also represent a significant threat to water management. Utilities cannot afford technological upgrades and the trained staff that must come with those upgrades. This ends up costing the utility more and jeopardizing their service.
- These investments are not only good for the utility, but they are also good for the community.
Reality
The escalating costs for treatment, system hardening, and waste disposal represent a nearly insurmountable burden for utilities, on top of inflation making labor for O+M more expensive as well.
- These costs, without federal intervention and investment, will be passed on to consumers.
- Delaying these upgrades to utilities will have dire, and even more expensive, outcomes in maintaining service, cost to the consumer, and infrastructure failure.
Keep Funds Flowing Impact
Keep Funds Flowing: Virginia region replenishes underground aquifer
In 2018, HRSD opened a research center that takes some of the highly treated wastewater through additional treatment to bring it to drinking water standards. Today, a million gallons of that water is returned every day to an underground aquifer. In the future, two more facilities — one slated to open in 2026 and another in 2029 — will return up to 50 million gallons per day.
Read More
Replacing a century-old reservoir, thanks to SRF funding
When a community’s water infrastructure is more than a century old, the stakes for renewal are high. In Canton, Ohio, the city’s main storage reservoir — constructed around 1920 — has served generations but in recent years finally showed signs of wear. Thanks to the Drinking Water State Revolving Fund (DWSRF), Canton is now on the cusp of a major upgrade that will secure safe, reliable water for its 100,000 residents for decades to come.
Read More
Keep Funds Flowing: SRF loans deliver big savings and clearer water for Utah residents
As drought conditions persisted and the district’s reliance on groundwater increased, so did the complaints about water clarity. When it became clear they would need to install an oxidation and filtration system, it was a local firm that clued them into the federal funding available to support projects like these.
Read More
“To ensure that safe, reliable drinking water remains accessible without driving millions of households into economic hardship, it is imperative that federal investment in the water sector evolves from temporary measures into a more significant, sustained long-term commitment that supports the sector’s growing financial reality.”
