The average household water bill could more than double within the next 25 years, a trajectory already taking shape.
It’s a startling statistic, one of many cited in the recent AWWA report, Beyond the Replacement Era: Balancing Compounding Infrastructure Needs with Household Affordability.
The report shows what 2050 could look like if local ratepayers foot the whole bill for projected drinking water infrastructure needs, which is estimated to be $2.1-$2.4 trillion in 2025 dollars. It’s a matter of the typical water bill going from $429 to $969, a number likely to rise with inflation.
That would leave an estimated 30.4 million households spending more than 2.5% of their income on drinking water, with 53.5 million households exceeding a 1.5% income threshold.
The numbers tell a clear story of water affordability risk. And in doing so, they shape the story around how government and the water sector must collaborate to make these upgrades more cost-effective.
The clock is ticking on some federal funding
When President Biden signed the Infrastructure Investment and Jobs Act (IIJA) in 2021, it represented the single largest federal investment in the water industry. The historic $1.2 trillion bill allocated $55 billion to the nation’s water infrastructure, providing funding for everything from lead service line replacement to PFAS remediation.
On Sept. 30, 2026, IIJA will expire, and, with it, the infusion of funding for new projects.
There are some other funding programs that will remain.
The State Revolving Funds (SFR) program, which predates IIJA by decades, continues to provide low-interest loans to help states fund drinking water infrastructure projects. When the utility repays its loan, the principal and interest flow back into the same fund, so the funds can revolve and be reallocated at the state level.
The Water Infrastructure Finance and Innovation Act (WIFIA) of 2014, meanwhile, continues to offer financing for larger, more complex water infrastructure projects. The minimum project size is $20 million for large communities and $5 million for small communities.
While SFR and WIFIA remain critical, the reality is that only 3.9% of public spending on water sectors comes from federal sources. Compared to airports and highway transport, that’s a much lower percentage.
Part of that funding gap stems from the fact that the water sector has a very real and significant customer base.
“We do have the ability to raise revenue in a relatively straightforward manner,” stated Adam Carpenter, AWWA’s Senior Manager of Environmental Policy.
Where drinking water rate increases hit hardest
The loss of funding creates a conundrum for the water sector.
On one hand, the industry could fall behind in making necessary repairs and upgrades, and, as Carpenter notes, “If you fall too far behind for too long, there will be problems of some kind.”
Based on when different types of pipes were installed and their expected service life, there’s a timeline for when they statistically need to be replaced. While equipment working beyond this timeline raises concerns for water quality and public health risks, delays in addressing elements like regulatory compliance, climate resilience, and cybersecurity come with their own red flags.
If the industry does rise to the challenge and implements these infrastructure upgrades without some kind of outside assistance, it would come almost exclusively from what customers pay. We’ve seen a preview of that impact and where it leaves many households across the country.
While current programs offer considerable help, this $2+ trillion infrastructure upgrade calls for more funding, whether that’s through more of the same types of programs or new structures.
Even with a substantial amount of federal funding provided, it’s likely there will still have to be substantial rate increases over time.
To Carpenter’s point, “we don’t want a situation where some people are being left behind.”
Funded by two runs of COVID relief bills, the Low Income Household Water Assistance Program (LIHWAP) assisted households with the highest “water burdens,” or those paying the greatest proportion of their income toward drinking water and/or wastewater services. The federally funded program ensured that any households whose services were disconnected due to non-payment, or on the verge of being disconnected, could have their services restored fast.
Over the life of the program, which sunset in March 2024, LIHWAP served more than 1.5 million households.
The revival of LIHWAP or a program like it could help subsidized individual households that are at the most risk of falling behind on their service bills.
The three-part standard for getting things right
If we fast-forward to 2050, Carpenter describes success for the water sector through two lenses. It’s about making investments so that water is safe, reliable, and aligned with all the necessary standards. It’s also about making investments affordably, so everyone can utilize the resource.
As the AWWA report shows, there’s a lot of spending that needs to happen to make these infrastructure upgrades possible. The average annual capital spending for drinking water utilities is roughly $33.6 billion. It would have to go up to about $90.2 billion to meet these challenges.
That’s about a $56.6 billion gap, with a 168% increase in capital investment needed to meet the entire goal.
Government programs and funding are an integral part of these efforts. The same can be said for creating a shared understanding of just how critical safe and reliable drinking water is to our communities.
Carpenter goes back to the example of airports.
“Not everybody uses airports every day, but they’re a key part of our economy and a key driver of pushing society forward in many ways and connecting it. They receive a lot of subsidies for that reason. Perhaps we should start thinking a little more along those lines for water as well.”
