How Water Infrastructure Can Drive Economic Growth
By Christian Bonawandt
The U.S. water and wastewater industry is standing at an awkward crossroads. For years, technical capabilities, federal funding, and a shared sense of industry urgency have all co-existed in a critical mass. However, the rollout of major infrastructure projects remains sluggish. In a recent episode of The Water Online Show, hosts Travis Kennedy and Kevin Westerling sat down with Karine Rougé of Veolia and Rob Powelson, president and CEO of the National Association of Water Companies (NAWC). Both experts boast unique expertise at the intersection of water policy, finance, and operations.
A central focus of the discussion was a newly released industry white paper co-authored by Veolia and the NAWC, titled “Beyond 2050: The Economic Imperative of Water Infrastructure Investment.” The paper argues that the industry urgently needs a paradigm shift. Water infrastructure must no longer be treated as an invisible background utility, but rather championed as a fundamental pillar of national economic competitiveness, local growth, and structural resilience.
The Three-Dimensional Lens Of Water Infrastructure
For decades, municipal and federal policymakers have viewed water primarily from the standpoint of public health or environmental compliance. However, to resolve the current infrastructure backlog, Powelson argued, stakeholders must understand the system’s complexities through a three-dimensional model that includes economics, policy, and hard physical infrastructure.
“If you don’t understand the economics of water — we'll call that the value proposition — and you don’t understand the policies that need to bolster investment and compliance and address fragmentation, then you can’t get at the third dimension of this, which is the pipes, the meter sets, and the hard infrastructure that delivers the water molecule to the home or business,” he said.
According to Powelson, the systemic breakdown of these three interconnected elements is a common trigger of infrastructure disasters. As an example, he cited the high-profile 2024 water crisis in Jackson, MS. When a system undergoes decades of deferred maintenance and structural neglect, he explained, it quickly shifts from a quiet public service into a full-scale humanitarian and economic crisis.
Quantifying The Return On Investment
Rougé built on this point by emphasizing that getting stakeholders to see water infrastructure as an economic imperative can fundamentally alter how public dollars are prioritized. By applying concrete figures to water investments, it enables public decision-makers to justify preventative capital expenditures that might otherwise remain buried out of sight.
“For every dollar invested in water, it is a $2.50 economic value creation, which comes in the form of jobs and other things,” she said. “Water is rarely a visible issue until you are at the total crisis moment. And if it’s not visible, then any spending has to make sense with a basic economics return on investment.”
This ROI model is even more persuasive when a community has multiple interests competing for commercial viability. Whether a city is attempting to attract industrial manufacturing plants or data centers, Powelson said, water availability is rapidly becoming the ultimate gatekeeper for local economic development.
Public Urgency And Funding Gaps
While the passage of the federal Bipartisan Infrastructure Law injected an unprecedented $55 billion into the national water grid, both speakers cautioned that this sum is merely a down payment toward addressing an immense infrastructure funding deficit. “Gap analyses, whether from the U.S. EPA or American Society of Civil Engineers, show over the next 20 years, we need to get to $1 trillion,” said Powelson.
In addition, he pointed out that direct federal budgetary support for water utilities has steadily deteriorated by 40% since 1970, placing an unsustainable burden on local entities. To fill this widening vacuum, both speakers suggested the strategic deployment of private capital will prove essential. Yet, the primary bottleneck delaying deployment isn't merely financial — it is public awareness.
“The issue is the lack of urgency in the general population,” Rougé said. “The more we can get public outcry demanding better infrastructure, the more we’ll get attention from elected officials who might not have that right now in their priorities.”
Overcoming Fragmentation And Digital Stagnation
Another major developmental and investment barrier unique to the U.S. water system is its hyper-fragmentation. The U.S. currently operates more than 51,000 individual drinking water systems, a number that Powelson described as a monumental obstacle to efficient capital allocation. As a result, Powelson added, roughly 1,500 U.S. water systems currently remain operational despite being in serious non-compliance with the Safe Drinking Water Act (SDWA).
This is vastly different from the highly centralized nuclear power sector. “Our nuclear power plants today are some of the most world-class highly regulated and you don't hear about it because they're meeting and exceeding standards,” he exclaimed. “And we’re nowhere near that in the water side on compliance.”
The speakers noted that a potential solution for this is outlined in the aforementioned white paper, which calls for aggressive utility consolidation and scaling. Rougé observed that achieving an optimal operational scale allows a utility to function with significantly higher levels of efficiency and technical sophistication, regardless of whether it is run using a public or private model. Moreover, this lack of scale also feeds into the slow adoption of digital water technologies. Both speakers agreed that while the technology is mature, utilities are often paralyzed by a risk-averse culture and the absence of regulatory frameworks that incentivize digital investments.
“Utilities are sometimes the last adopters of technology,” said Powelson. “For example, every industry around us had moved to a cloud-based computing model where we haven’t. And why? Because the regulatory agency didn’t understand not only cloud-based computing, but the financial recovery that comes with this investment.”
Metrics For A Resilient Future
When asked what a successful turnaround would look like over the next three years, Powelson outlined a strict wish list of data-driven metrics. This included a steep reduction in SDWA violations, increased pressure to minimize water main breaks, accelerated replacement of aging pipelines, and a dramatic expansion of national water reuse initiatives. He noted that while the U.S. consumes water at a high rate, its water reuse rate remains below 2%.
Ultimately, the panel concluded that the survival of America’s water infrastructure depends on making the invisible visible. By leveraging social media and pushing for permanent federal funding for affordability programs, the industry can move from reactive crisis management to proactive economic growth.
Christian Bonawandt is an industrial content writer for Water Online. He has been writing about B2B technology and industrial processes for more than 25 years.