Spoiler Alert

Abstract

Spoiler alert—what follows includes three yet-to-be published results from AWWA's State of the Water Industry survey and subsequent report. It also connects these spoilers to the implementation strategies of Water 2050. Read on if you cannot wait for the 2025 State of the Water Industry Report to be published.

Each year, AWWA surveys water professionals to gauge their experiences, opinions, and thoughts on a plethora of water issues. It is this information that shapes AWWA's State of the Water Industry Report. The survey starts by evaluating the water sector's level of optimism. The first spoiler is that in 2025, optimism rose from the previous year, making 2025 the fourth-highest level in the past 20 years. If you can believe it, all four highest optimism years have occurred since 2020, when we were in the thick of the COVID-19 pandemic—looking back, it is hard to understand why there was great optimism during that time.

The second spoiler is a change in the top challenges and issues that the water sector is facing. For the first time ever, the top issue for the water sector is financing for capital improvements. In the past, the concern of accessing financing for capital improvements has been steady as the second-highest issue, except for 2023, when it slipped to the third position.

Similarly, a utility's financial viability debuted at number 5 in 2024 and has now moved down to the sixth position. It is striking, perhaps alarming, that two of the top issues of concern for the water sector have to do with financial capabilities.

The third spoiler is that approximately 41% of utilities are very to fully able to cover the cost of their service. That is the good news. At the other end of the spectrum—the not-so-good-news—30% of utilities can, at best, only slightly cover the cost of service. While this is understandably concerning, and it certainly exposes a real water sector risk, what may be even more of a concern is that the percent of utilities able to cover their costs only slightly or not able to cover costs at all has been unchanged since at least 2015.

AWWA's Water 2050 vision—a vision that charts the future of water to the year 2050—intends to help improve this conundrum. In the near term, five Water 2050 strategic initiatives have been formed, one of which focuses on utility finance and affordability. The goal of this strategic initiative is for all utilities to be financially sustainable—which, as a reminder, will address the sixth-highest challenge currently facing the water sector (see spoiler number two, at left).

The team working on the finance and affordability initiative is developing a set of financial procedures and requirements that will guide and support utilities as they build their financial and operational capacity to cover their costs. While the initiative is still in its infancy, the good news is that this model is not novel; a similar model has been used before by one of the Water 2050 partnering organizations, and it is a proven one.