Infrastructure and Affordability

Building on themes from my July/August 2024 column, “Affordability: Two Sides of the Same Coin,” how big is America's water infrastructure funding need, and how big of a challenge is affordability? It ends up that it depends on whom you ask and what specifically you are asking. There is a massive need for investment in water infrastructure, while simultaneously affordability is a substantial and growing concern. Over time, most of the costs of infrastructure ultimately have been paid for locally. The bulk of federal and state infrastructure funding occurs through mechanisms such as the Drinking Water and Clean Water State Revolving Loan Funds (SRFs), Rural Development (Water & Environment Programs) loans, and the Water Infrastructure Finance and Innovation Act. While loan rates are subsidized by these programs compared with market rates, only disadvantaged communities as defined by state programs have access to loan forgiveness for a portion of SRF loan amounts.

While increased funding for the SRFs from the Infrastructure Investment and Jobs Act (IIJA) will continue through fiscal year 2026, discussions about possible extensions are in early stages and not guaranteed. As of this writing, annual SRF appropriations (outside of IIJA) are not yet known but may be reduced from prior levels. So what is the scope of US water infrastructure needs?

AWWA's flagship Buried No Longer report (2012) used historical water main sales data and anticipated replacement rates to estimate a $1 trillion need over 25 years for replacement and expansion of buried drinking water infrastructure. Although a pivotal assessment, it does not cover more recently identified challenges, and we are now halfway through the time period it covered.

The US Environmental Protection Agency's (EPA's) seventh drinking water needs survey (2023) found $625 billion in need over 20 years for SRF-eligible projects across US states, territories, and Washington, D.C. Notably, this estimate was prepared before several major regulatory actions.

Major new drinking water regulations are generating new costs. Estimates from an AWWA-sponsored study include the cost for drinking water treatment to comply with the per- and polyfluoroalkyl substances (PFAS) drinking water standards at $37.1–$48.3 billion in capital improvements alone. The costs of full lead service line replacement as required by the Lead and Copper Rule Improvements (LCRI) cost an average of $12,500 each, meaning the cost of removing the more than nine million estimated remaining US lead service lines would exceed $100 billion—a task that the LCRI requires water systems to complete by 2037.

EPA's affordability needs assessment found that 12.1 to 19.2 million households may already have water bills that exceed affordability thresholds by $5.1–$8.8 billion per year cumulatively, demonstrating a substantial affordability need even before all the above investments are made.

None of these estimates account for macroeconomic developments including inflation and supply-chain implications for project costs that have arisen since the analyses were prepared. At present the sector still lacks a comprehensive analysis of major emerging cost centers, including elevating cybersecurity, ensuring adequate water supplies, managing biosolids when PFAS contamination is a limiting factor, or enhancing source water protection.

How Big Is the Need?

While the true scale of infrastructure needs facing the sector remains elusive, AWWA is sponsoring a study to review the available information and project a new estimate. If you are aware of state or regional studies that would inform this estimate, please contact AWWA at [email protected].

Water systems can look to Thinking Outside the Bill for opportunities to ease local affordability challenges. The report identifies opportunities to assist customers using formal assistance programs and when such programs are not in place. AWWA's affordability page includes other useful resources. The capital investment and operational needs ahead for the sector also highlight the importance of effective utility management practices.

Infrastructure and affordability are perennial issues that have been concerns for the water sector as long as the water sector has existed and will continue to be concerns for the foreseeable future. That being said, today is a key inflection point—a moment in which pressures from meeting both local needs and external demands will necessitate careful planning, skilled execution, and creative thinking to keep water both safe and affordable today and beyond.