EY-The US water sector on the verge of transformation

The US water sector on the verge of transformation

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The US faces several major water challenges: increasing water scarcity, aging infrastructure, climate volatility, water quality issues and rising water-related energy risks1.

To address these immense challenges effectively, the water and wastewater sectors must address underlying structural and financial impediments that hamper the adoption of system innovation and efficiency-focused strategies.

The best practices developed to meet these challenges have improved the long-term financial viability of water systems while decreasing water consumption and reducing pollution.

Given the crucial nature of water sustainability, it is imperative to invest in water infrastructure, innovative technologies and new approaches.

Mobilizing stakeholders to support new investment and structural reforms will require more forceful communication of the challenges, action plan and anticipated results.

Venture capital investment in US water

EY-The US water sector on the verge of transformation

Fact-based leadership can help bridge differences and bring stakeholders together to support market reforms. We need more quantitative transparency regarding water scarcity, allocation and true costs to overcome the inertia regarding the need to innovate water systems across the US.

Read our entire report, The US water sector on the verge of transformation, to learn more.


Action agenda

We created the following action agenda to navigate the US water sector on the verge of transformation.

  1. Develop the data and transparency practices needed to establish consistent, comprehensive pricing models that reflect the true economic value of water, inclusive of sustainability and social values.
  2. Improve quantitative management by establishing common terminology, standards and comparable metrics for water disclosure and footprinting.
  3. Consider the opportunity to bring new capital, dynamism and efficiencies to the water sector through private equity-driven consolidation.
  4. Spur the development of public-private and public-public partnerships to help close the water funding gap by bringing globally established best practices to the US market.
  5. Strengthen the water innovation ecosystem by establishing industry frameworks for assessing and adopting new technologies.
  6. Open up conservative utility bidding procedures and update building codes to allow for procurement of efficient, cutting-edge equipment and technologies.
  7. Encourage innovation and competition in serving water systems by providing incentives for consultant rotation, independent advice and transparent bidding processes.
  8. Expand the decoupling of regulated utility revenues from water consumption to enable investments in conservation and efficiency, especially in water-stressed regions.
  9. Consider more closely long-term capital expenditure needs and water source availability, as well as the traditional financial indicators, in the formulation of water utility bond ratings.
  10. Convene the various institutions with oversight on water to set a coherent national water agenda, one that includes efficiency goals, upon which updated regulations and implementation mechanisms would be based.


1Global Climate Change Impacts in the United States, US Global Change Research Program, 2009; Peak water limits to freshwater withdrawal and use, Peter H. Gleick and Meena Palaniappan Pacific Institute, 2010.