The United States’ water infrastructure is struggling to keep up with increasing environmental challenges, outdated systems, and emerging contaminants, experts warn. Despite recent federal investments, the country’s aging water systems remain vulnerable to climate change, population growth, and new cleanup demands, according to the American Society of Civil Engineers’ (ASCE) 2025 Infrastructure Report Card, released last week.

The report highlights significant shortcomings: drinking water infrastructure received a “C-” rating, while wastewater infrastructure was given a “D+.” Stormwater infrastructure, one of the lowest-scoring categories, tied with transit at a “D.” These grades remain unchanged from ASCE’s 2021 report card, underscoring the stagnant progress in improving America’s water systems.

Funding and Infrastructure Challenges

The Infrastructure Investment and Jobs Act (IIJA) of 2021 contributed to lifting the country’s overall infrastructure grade to a “C,” the highest recorded. The $1.2 trillion package included approximately $69 billion for water infrastructure projects, covering essential areas such as:

• $14 billion in additional funding for State Revolving Loan Funds (SRFs) to help states finance drinking water and wastewater improvements.
• $15 billion dedicated to replacing aging lead service lines.
• $10 billion allocated for PFAS (per- and polyfluoroalkyl substances) contamination cleanup.

However, much of this funding will take years to reach affected communities. Boston-based consulting firm L.E.K. Consulting estimates that the full disbursement of funds could take up to a decade due to bureaucratic processes at multiple government levels. Additionally, inflation has eroded some of the buying power from these funds, and extreme weather patterns are compounding existing infrastructure vulnerabilities, according to the Environmental Protection Agency (EPA).

Decades of underfunding have placed utilities in a precarious financial position. Carol Haddock, vice chair of ASCE’s Committee for America’s Infrastructure, noted the lingering challenges in a news briefing last week.

“What we’re seeing is that investment allowed us to eat away some of the backlog, while new backlog was also being generated,” Haddock said. “We’ve also seen over the last few years, a very significant increase in the cost of operations on the utilities, the cost of electricity, the cost of chemicals and the cost of our employee workforce.”

Mounting Financial Pressures on Utilities

The burden of maintaining and improving water infrastructure falls primarily on ratepayers, yet many utilities are struggling to break even. According to ASCE, only 20% of water utilities report being able to fully cover the costs of their drinking water services, even as consumer water bills continue to rise.

A March 11 report from New York-based consulting firm McKinsey & Co. revealed that the U.S. water utility sector faced a staggering $110 billion funding gap in 2024, amounting to nearly 60% of the total estimated spending needed to maintain operations. If the funding shortfall continues, this gap could balloon to $194 billion by 2030.

This financial strain is exacerbated by increasingly complex climate-related hazards such as water stress and flooding. McKinsey identifies two primary risks for utilities:

• Water stress: Driven by increased agricultural and industrial consumption, policy shifts, and climate change, water scarcity threatens long-term sustainability.
• Flooding: Severe rainfall, river overflows, and coastal surges are placing additional pressure on aging infrastructure.

Although utilities are not responsible for creating these challenges, they must develop solutions while continuing to provide clean drinking water and wastewater management, the report states.

“Although water utilities did not create these challenges, they must not fail to provide solutions as well as drinking water and wastewater services. If they do, the consequences for communities could be catastrophic,” according to McKinsey.

Addressing Emerging Contaminants

In addition to climate threats, utilities must now contend with increased regulation of emerging contaminants such as PFAS. Sometimes referred to as “forever chemicals” due to their persistence in the environment, PFAS pose serious health risks. Cleanup efforts have intensified following the EPA’s April 2024 decision to classify two PFAS compounds as hazardous substances under the Superfund program.

“Improving U.S. water infrastructure requires the public and private sectors to work together,” said American Water CEO M. Susan Hardwick in a March 25 news release.

ASCE’s new report card “is a stark reminder of the urgent need for significant and continued investment in water and wastewater infrastructure across the country,” Hardwick added. “Our nation continues to lack when it comes to investing in critical infrastructure, particularly in these sectors.”

Regional and National Efforts to Improve Water Infrastructure

Some states are taking proactive steps to address water system vulnerabilities.

Texas‍

Facing severe water shortages by 2030, Texas is investing billions of dollars into repairing aging infrastructure and developing new water sources, according to the Texas Tribune.

California‍

The state is funding various projects to combat flooding, drought, and other extreme weather impacts. The Public Policy Institute of California reports that these efforts aim to enhance water resilience statewide.

Midwestern and Northeastern states‍

Many jurisdictions are expanding their stormwater management programs and upgrading water treatment facilities to adapt to climate-related changes.

The Need for Better Data and Planning

A major obstacle to improving water infrastructure is the lack of comprehensive data on system conditions. ASCE found that only 30% of utilities have fully implemented an asset management plan, while just under half are in the process of doing so.

“There are still many areas of the nation for all the water categories that don’t have great asset management systems to understand where their infrastructure is, what’s the condition, the age, the materials, and when was the last time it was replaced,” said Pat Lach, member of ASCE’s Committee for America’s Infrastructure. “You need to know what infrastructure you have and what are the demands on it for the future.”

Despite financial and structural constraints, some utilities are making progress by using predictive maintenance technologies to identify and address infrastructure failures before they occur. These advancements could help extend the lifespan of existing systems and mitigate the risk of costly breakdowns.

Water Funding and Federal Policy

The future of federal water infrastructure funding remains uncertain under the Trump administration. Many IIJA funding allocations, including those for water, are currently under review as the administration assesses various programs for compliance with new executive orders.

Still, industry leaders are hopeful that water infrastructure will remain a bipartisan priority. Former ASCE president Kristina Swallow emphasized this point in a recent media call.

“100% [infrastructure] is a bipartisan interest area, focus area and commitment,” Swallow said. “The investment levels that we saw under the last administration have really started to move the needle, and we’re looking forward to advancing that conversation as we move into this administration.”

During a March 11 congressional hearing, industry experts testified on the importance of increasing funding for water infrastructure projects. National Utility Contractors Association past Chairman Dan Buckley made a compelling case for greater investment.

“Clean water and sanitation are not luxuries — they’re the lifeblood of civilization,” Buckley said. “We need more federal investment. The scale of this crisis demands it. As Congress debates the future of federal spending, lawmakers should consider reallocating more dollars towards these essential programs.”

The Path Forward

Addressing America’s water infrastructure crisis requires a multi-faceted approach, including increased funding, better asset management, and public-private collaboration. Without decisive action, the challenges posed by aging systems, climate change, and emerging contaminants will only grow.

While recent federal investments have helped prevent further decline, experts stress that sustained commitment is essential to ensuring safe and reliable water systems for future generations.

Originally reported by Julie Strupp in Construction Dive.