Study: Aging systems, regulations to drive $515 billion in U.S. water infrastructure upgrades
(UI) — U.S. capital expenditures on municipal water and wastewater treatment infrastructure are projected to surpass $515 billion through 2035, according to a new report from Bluefield Research.
The forecast highlights a compound annual growth rate of 4.4%, with annual spending expected to increase from $37.2 billion to $57.3 billion over the next decade. The surge in investment reflects growing pressure to modernize aging systems amid tightening regulations, shifting demographics, and climate impacts.
Wastewater infrastructure accounts for the bulk of the projected spending—58% or $310.4 billion—driven by sewer system expansions, adoption of advanced treatment technologies, and efforts to reduce overflows. Drinking water infrastructure, projected to total $214 billion, is growing slightly faster due to new compliance requirements, PFAS mitigation, and storage mandates.
“Nearly 80% of forecasted spend—$406.4 billion—is slated for upgrades and rehabilitation of existing treatment systems and assets, highlighting the condition of U.S. drinking water and wastewater infrastructure,” said Charlie Suse, Senior Analyst at Bluefield Research. “Given the mounting challenges, utilities need to identify ways to transition from reactive fixes to more advanced long-term asset strategies that improve resilience and contain costs.”
Geography remains a major factor shaping investment. The South is expected to represent 44% of total spend, with Texas and Florida leading due to rapid suburban growth and climate-related risks. Smaller states such as Connecticut, Washington, and Maine are projected to see the fastest growth, fueled by aging assets and stricter regulations.
Utility size also influences capital strategies. Mid-sized utilities—those serving between 25,000 and 100,000 people—are well-positioned to implement scalable and modular solutions. Larger utilities often have in-house capabilities, while smaller ones may struggle to access funding.
“Mid-sized utilities are the sweet spot—representing a core investment opportunity for solution providers,” Suse added.
Digital technologies, such as remote monitoring, energy optimization, and automation, are also gaining traction as utilities work to reduce long-term labor costs and improve operational reliability.
However, delays in federal funding and new tariffs are creating hurdles. As of April 2025, only 14% of the $43.6 billion allocated to State Revolving Fund programs through the Infrastructure Investment and Jobs Act had been deployed. Nearly half of awarded projects are concentrated in just seven states.
“Water and wastewater services are fundamentally inelastic—people and businesses need them regardless of economic cycles,” said Suse. “This essential nature of water reinforces why deferring investment is not a viable option and why the outlook remains strong.”
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