Infrastructure costs are rising, putting affordability at risk

A new report from the American Water Works Association shows that drinking water infrastructure and other needs will require $2.1 to $2.4 trillion over the next 25 years.

That’s the equivalent of $56.6 billion more in spending every year until 2050.

The report, “Beyond the Replacement Era: Balancing Compounding Infrastructure Needs with Household Affordability,” provides the most comprehensive assessment to date of the investments needed to sustain safe, reliable drinking water service through 2050.

In addition to replacing aging infrastructure, utilities are also faced with increasing regulatory compliance, climate resiliency needs, and cybersecurity demands. Together, these issues compound the financial burden on utilities and signal a structural shift — rather than a temporary spike — in the cost of providing safe drinking water.

“We’re paying the price for all of these things that are coming all at once now, so we can’t catch up fast enough,” said Mike Grimm, vice chair of AWWA’s Water Utility Council, at the AWWA/WEF Utility Management Conference in Charlotte, N.C., last week.

“Things that even 10 years ago we never thought about are all now adding to the cost of what it takes to run a water supply system,” Grimm added.

If ratepayers alone are asked to fill the funding gap, average annual household drinking water bills would more than double — from $429 in 2025 to $969 by 2050 (in 2025 dollars).

“Water rates fund everything that we do — operations, water purchase, as well as capital investments,” said Grimm, who is general manager at West Slope Water District in western Oregon. “That’s a problem if that’s all that we have, with this increasingly high cost of operating and managing and maintaining sustainability for a water supply system.”

The report, developed in partnership with Raftelis and One Water Econ, was informed by capital and operating costs required to meet new regulatory requirements such as lead service line replacement and PFAS removal, climate resilience, treating and managing complex source waters, and investments in cybersecurity. Previous AWWA infrastructure reports focused primarily on replacement of buried water mains. “Beyond the Replacement Era” carries five key findings:

1. The water has entered a new cost era.
2. There is a persistent and growing funding gap.
3. Household drinking water bills are likely to more than double.
4. Affordability is at a tipping point.
5. Core federal infrastructure programs are critical.

The Infrastructure Investment and Jobs Act provided a historic and much-needed infusion of funding, but it expires this year. Core funding programs — like State Revolving Funds (SRF) and the Water Infrastructure Finance and Innovation Act (WIFIA) — remain critical, helping water utilities access low-cost loans with extended repayment periods and customizable terms. Currently, 3.9% of public spending on water sectors (drinking, wastewater, stormwater) comes from federal sources.

“Beyond the Replacement Era” extends a series of AWWA reports that have characterized the U.S. water infrastructure challenge over the past 25 years. Others include “Dawn of the Replacement Era” (2001), “Thinking Outside the Bill” (2004, 2014, 2022), “Water Infrastructure at a Turning Point” (2006), and “Buried No Longer” (2012).