Beyond The Replacement Era

AWWA Report Finds Rising Drinking Water Infrastructure Costs and Other Needs Put Affordability at Risk
 

(Charlotte, NC) - A report released today by the American Water Works Association (AWWA) finds that addressing U.S. drinking water infrastructure and other critical needs will require $2.1-$2.4 trillion over the next 25 years, testing the limits of water affordability.

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.

“Drinking water infrastructure underpins the health and economic vitality of our communities, but the cost of sustaining it is rising rapidly,” said AWWA President Heather Collins. “ Beyond the Replacement Era  makes clear that the path to a resilient and affordable water future depends on collaboration — among water utilities, policymakers, all of us — while keeping front and center the people and families who must be able to afford water without sacrificing other essential needs.”

Developed in partnership with Raftelis and One Water Econ, the report’s five key takeaways include:

1. The Water Sector Has Entered a New Cost Era
   Drinking water utilities are no longer facing just an asset‑replacement challenge; they are confronting a compounding set of cost drivers that include regulatory compliance, climate resilience, cybersecurity, and treating more complex sources. Over the next 25 years (2026–2050), total drinking water infrastructure needs are projected at $2.1–$2.4 trillion in 2025 dollars, far exceeding earlier estimates tied solely to buried infrastructure. These pressures signal a structural shift in the cost of providing safe drinking water, not a temporary spike.
2. There Is a Persistent and Growing Funding Gap
   Current capital spending by drinking water utilities averages about $33.6 billion per year, while the annual investment needed to meet projected requirements is approximately $90.2 billion. This leaves an annual funding gap of roughly $56.6 billion, requiring a 168% increase in capital investment to close it. With a few exceptions (such as the Infrastructure Investment & Jobs Act (IIJA)), federal contributions have been limited.
3. Household Drinking Water Bills Are Likely to More Than Double
   If communities rely exclusively on revenue from water bills to close the funding gap, average annual household drinking water bills would rise from $429 in 2025 to $969 by 2050 (2025 dollars) -- more than doubling in real terms. Even under a baseline spending scenario, bills are projected to increase to $685, reflecting rising operating and maintenance costs.
4. Affordability is at a Tipping Point
   If the funding gap is addressed entirely through increases in household water rates, an estimated 30.4 million households – or 21.5% -- would spend more than 2.5% of their income on drinking water, and 53.5 million households -- 37.8% -- would exceed a 1.5% income threshold. An estimated $13.6 billion per year in assistance would be needed by 2050 to keep water bills below commonly understood affordability benchmarks. Impacts would disproportionately affect low‑income households and communities served by small systems.
5. Core Federal Infrastructure Loan Programs are Critical
   The Infrastructure Investment & Jobs Act provided a historic and much needed infusion of funding that expires after the fiscal year 2026. However, temporary programs will not fully stabilize the sector. Core funding programs like the State Revolving Loan 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. Reductions in financing costs can moderate rate increases and help keep water affordable.

Unlike earlier assessments focused primarily on buried drinking water infrastructure,  Beyond the Replacement Era  incorporates a broader set of cost drivers, including treatment upgrades for emerging contaminants such as PFAS and lead service line replacement.

Only 3.9% of public spending on water sectors (drinking, wastewater, stormwater) comes from federal sources, far below levels provided to other infrastructure sectors. 

“The first step toward solving any challenge is recognizing its full scope, and  Beyond the Replacement Era  does exactly that,” said AWWA Chief Executive Officer David LaFrance. “It makes clear that progress will require collaboration across all levels of government and a shared understanding of why drinking water is so critical in our communities. AWWA looks forward to collaborating with our many partners in the water sector and beyond to prepare a future where reliable water is available and affordable to everyone.”

The report was announced at a special briefing during the AWWA/WEF Utility Management Conference in Charlotte, NC.  Beyond the Replacement Era  builds on a series of AWWA drinking water infrastructure and affordability reports including  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).

The report is available here to download.

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Infrastructure, Resilience, & Other Costs Are Pushing the Limits of Water Affordability

The U.S.’s drinking water systems have entered a new cost era. Communities are no longer facing just an asset‑replacement challenge. Communities are confronting a compounding set of cost drivers including aging infrastructure, regulatory compliance, climate and resilience investments, cybersecurity risks, rising operations and maintenance costs, and treating more complex water sources. 
 
Over the next 25 years (2026–2050), total drinking water infrastructure needs are projected at $2.1–$2.4 trillion (2025 dollars), far exceeding earlier estimates that focused primarily on replacing buried pipes. These pressures represent a structural shift in the cost of providing safe, reliable drinking water, not a temporary spike. 
 
If communities rely exclusively on revenue from water bills to close the funding gap, average annual household drinking water bills would rise 126% by 2050, without considering inflation.

A Persistent and Growing Annual Funding Gap

Today, drinking water utilities invest approximately $33.6 billion per year in capital improvements. Meeting projected infrastructure needs would require an average annual investment of about $90.2 billion, leaving an annual funding gap of roughly $56.6 billion, a 168% increase over current spending levels. 
 
Local communities already fund the vast majority of drinking water infrastructure. Federal contributions account for only about 3.9% of total public spending on water utilities, far below the federal share provided to other major infrastructure sectors.

Closing the Gap

Drinking water utility revenues and consumer fees currently provide the primary source of funding for infrastructure investment, placing the burden of capital improvements largely on local ratepayers. 
 
Federal financing programs can help reduce this burden by lowering borrowing costs and spreading repayment over longer periods. Core programs such as the State Revolving Loan Funds (SRF) and the Water Infrastructure Finance and Innovation Act (WIFIA) provide low‑cost, flexible financing that helps utilities advance critical projects while moderating rate increases for households. 

Infrastructure Investment and Jobs Act

Water Utilities Receive Less Federal Aid than Any Other Major Class of Infrastructure

Affordability Impacts

The projected increase in water service costs significantly expands the number of households facing water affordability challenges.

$2+

trillion total drinking water infrastructure investment needed.

$56.6

billion annual gap between current annual funding and projected needs.

$200.3

billion annual spending needs through 2050.

126%

average household water bill increase without inflation.

30.4

million households would spend more than 2.5% of incomes on drinking water if funding gap is addressed entirely through rate increases.