A recent report conducted by McKinsey & Company details how local regulators can reinforce the resilience of utilities.
The report highlights funding issues across the private and public water and wastewater sectors. Aging infrastructure and maintenance costs have resulted in higher utility rates for customers which, according to the report, have been unable to close the funding gap.
According to the research, the U.S. water utility sector faced an estimated $110 billion funding gap in 2024 – almost 60% of utilities’ overall spending. The report relates this to investments in aging infrastructure, operating expenses and water-quality regulations. The report predicts this gap could increase to approximately $194 billion by 2030.
Report highlights
Key findings of the report include:
- The U.S. water sector could see a $194 billion funding gap by 2030—but strategic action by state and local leaders can help could cut this shortfall by up to 50% with tools already at their disposal.
- 70% of small utilities– and 60% of large utilities – could face a climate related hazard by 2030.
- 60% of small utilitiesalready face chronic water stress and only 10% maintain plans to protect against climate risk.
The analysis highlights ways that state and local leaders can take to help utilities increase resilience and mitigate funding issues.
Actions include:
- Optimizing existing funding sources (approximately 5 to 10% of the funding gap), including innovating existing rate structures, finding revenue opportunities, and maximizing existing state revolving funds and other programs.
- Prioritizing resilience outcomes (approximately 5 to 10% of the funding gap) by developing long-term resilience planning.
- Enabling operational efficiencies (approximately 15 to 25% of the funding gap) by supporting technology adoption, regionalization of the sector, and consolidated capital expenditures.
