Infrastructure replacement, financing remain top challenges for water industry

For the last decade, two issues — infrastructure renewal and replacement, and financing for capital improvements — have dominated the top of the list of concerns in the American Water Work Association’s State of the Water Industry report.

This year is no different.

Infrastructure renewal was the top issue of concern in the latest iteration of the survey, conducted in late 2025. The report, which shares the survey results and distills industry trends, was released this week.

“Water systems are facing more than an infrastructure replacement challenge. Utilities are managing a compounding set of cost drivers, including regulatory compliance, emerging contaminants, cybersecurity, climate resilience, and more complex treatment demands,” said AWWA President Heather Collins. “Together, these pressures are driving up the cost of delivering safe, reliable drinking water and intensifying affordability concerns for communities across the country.”

This is also a key takeaway from “Beyond the Replacement Era,” a new AWWA analysis that estimates infrastructure costs in the United States will reach $2.4 trillion by 2050. Without additional federal investment, the report forecasts a looming affordability challenge.

The State of the Water Industry survey shows that less than half of utilities — 43% — are very to fully able to cover the costs of operations through rates and fees. And about the same percentage — 46% — report they are planning to raise rates in the next five years; 24% say in the next year.

“External pressures — from global supply chains to extreme weather — are now part of the everyday operating environment for utilities. The resilience our members show in the face of these uncontrollable forces is extraordinary, but resilience alone isn’t enough,” said Brent Tippey, vice president at HDR and AWWA president-elect. “We need strategic foresight, supportive policy, and innovations that help utilities maintain reliability even when conditions shift overnight.”

New in this year’s survey are questions about:

• The impacts of U.S. tariffs: 51% report high to considerable impact on costs and 41% to construction delays.
• AI use: 56% anticipate some level of positive impact from generative AI technologies, but 49% say they don’t have a policy that governs AI use.
• Effects of overtime: Overtime is generally required to address on-call needs (56%) and emergency repairs (54%), but executives report effects on morale, budget, and operational efficiency.

The full State of the Water Industry report includes more detail on each of these topics (and others). Explore the results and trends at awwa.org/state-of-the-water-industry.