December 2025 Vol. 80 No. 12
Editor's Log
Why sewer and water markets enter 2026 cautiously optimistic
By Robert Carpenter, Editor-in-Chief
(UI) — Reading the shifting currents of market trends is a lot like reading tea leaves. I have a hard time believing that tea leaves can have any bearing on, well, anything.
But still, experts and amateurs will fill social and traditional media with their takes on various market conditions from just about everything that is sold or traded or valued today. More often than not, things just don’t turn out the way they predict.
This time of year, I too am asked incessantly about what I see for the markets we serve in underground infrastructure. To which I immediately throw out a disclaimer: I don’t pretend to be a reliable forecaster for industry market models in any way, shape or form. Still, it’s entertaining to take a shot at market outlooks and trends based upon conditions we’re following right now.
To kick off this sojourn of forecasting futility, let’s start with the sewer and water markets (I’ll continue my prognosticator role for other markets in our January issue). Sewer, water and even storm water market segments have been strong since before COVID. The problem has always been that cities have never been able to keep up with maintenance, replacement and growth of their piping systems.
Sometimes unavoidable shortages in local municipal budgets consistently prevent cities from keeping up with needs. But cities also have a way of overlooking sewer/water needs in lieu of more popular, or public-relations friendly, investments. Often the sewer and water market gets shortchanged – the old out-of-sight-out-of-mind mentality.
Regardless of the reasons, municipalities have found themselves running sewer/water deficits for decades. Predictably, cities turned to the Environmental Protection Agency’s (EPA) Clean Water and Drinking Water State Revolving Fund (SRF) programs to rescue them in times of crisis. Though really only a drop in the bucket of infrastructure needs, the Clean Water and SRF programs historically pumped desperately needed funds ($3.3 billion in 2024) into cities for sewer/water upkeep.
Then came the avoidable Flint, Mich., lead-lined pipe crisis which drove knee-jerk reactions across America. Calls – and occasional actions – generated mandatory water industry spending to replace potentially dangerous lead pipe. Next, post-COVID, the sewer and water markets got a huge boost when the 2021 Infrastructure Bill pumped an additional $55 billion over five years into the market. It was a miraculous lifeline for a desperate market. Combined with additional state and local spending, the sewer and water market has largely flourished over the past four years.
But now, as we enter the final year of Infrastructure Bill funding bonanza, the question is: will local and state governments continue to invest in the systems after the federal money is gone? While $55 billion is a lot of money, the country’s sewer/water systems are still estimated to need $600 billion to bring their systems up to date.
Adding insult to injury, it appears that the annual Clean Water and SFR program budgets could be cut by as much as 90 percent in the proposed federal appropriations budget, down to $300 million. (See the Infrastructure Insider column by Eben Wyman in this issue). The thinking around many in Congress is that after providing a funding jumpstart of $55 billion over five years, it’s time for local communities and states to start shouldering the lion’s share sewer/water project funding. Others in Congress are trying to increase that funding but still, it is clearly going to be an uphill battle to maintain multi-billion-dollar federal funding in the coming years.
Still, with federal money committed and local investment at the highest levels in decades, the 2026 outlook should remain strong for sewer/water markets. Long-term investment is still a wait-and-see scenario. Cities have dug an ocean-deep pit, and it remains to be seen if they have the determination and wherewithal to continue their climb back up to the surface.
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