The state of Water Infrastructure in the US has shown moderate performance, indicating the requirement for modernization and funding. The US water infrastructure funding has improved with the 2021 IIJA investment and initiatives. Let’s understand how the water infrastructure in the US gets its funds.
Water Infrastructure Finance USA
Water access is an important part of the US economy as it is used for power generation, agriculture, livestock, and other sectors. Hence, the US Water infrastructure must be well-established and well-built. The water consumption per capita is highest in the USA worldwide, more than in the UK, Japan, and Germany.
The financing for the water infrastructure is multi-tiered as it involves federal programs and state-managed funds, local government, and private company investments. The major funding of the water infrastructure involves the Water Infrastructure Finance Innovation Act, the state revolving fund, and others
In the IIJA 2021 Act, the Biden government granted a fund of more than $50 billion for drinking water, stormwater, and wastewater infrastructure from a total $69 billion for water infrastructure. This shows only a $14 billion increase in the funds for State Revolving Loan funds.
US Water Infrastructure Funding Breakdown
The IIJA investment is the biggest in the water infrastructure to improve the water systems in the country, which leverages the SRFs to ensure long-term improvement. Here you can find the complete breakdown of the $69 billion IIJA water infrastructure funding:
- $55 billion Programmatic funding FY 2022-26:
| SRF activities | $23.4 billion |
| Lead Service In replacement | $15 billion |
| Per-and Polyfluoroalkyl Substances | $10 billion |
| Tribal Communities | $3.5 billion |
| Indian Water Rights Settlements | $2.5 billion |
| Water and Sewer Tax Exemption | $1.3 billion |
| Bureau of Reclamation Water Programs | $1 billion |
Water Infrastructure Funding Programs in the USA
Clean drinking water is a vital need for Americans, and across the country, the government and authorities are working to maintain the infrastructure that can solve the water issues in the country. For decades, various federal programs have been helping in maintaining the water infrastructure, such as:
- WIFIA:
- This initiative, which was started in 2014 and is run by an EPA-run bank, offers both public and private borrowers flexible, affordable loan assistance as well as additional support for all kinds of water infrastructure, including stormwater, wastewater, and drinking water.
- The borrowers need to repay the funds, but with good terms that make the water infrastructure more affordable.
- The funding allocated for the WIFIA program is $72 million for FY 2025. Under the WIFIA, the loan amount cannot be greater than 80% of the water infrastructure project expenditure.
- SRFs:
- It is state-managed funds that are a combined form of federal and state grants, where the key focused areas are drinking water and clean water.
- The IIJA 2021 Act offers $11.7 billion fund to the SRF program, $15 billion for lead service line replacement, and $4 billion for emerging contaminants.
- WIIN Grant:
- WIIN established the small, underserved, and disadvantaged communities to fund the state, tribal, and territorial water systems and improve the water system to meet the drinking water demand.
- EPA awards the funding under this grant based on the population, water systems, and community.
- For FY 2025, the EPA has allotted $25 million for the WIIN program and allows applicants from all over the US states, territories, tribal areas, and other areas.
What are the funding challenges for the Water infrastructure in the US?
According to the ASCE, the water infrastructure in the 2025 report card remains a D grade, though overall grading for the infrastructure has improved to a C. According to the analysis, there will be a $3.7 trillion total investment shortfall in American infrastructure over the next ten years.
The water infrastructure funding gap for the 2024-33 is also higher, raising concerns such as:
| Water infrastructure | Funding Gap (in billions) |
| Dams | $166 |
| Drinking water | $309 |
| Hazardous & Solid Waste | $16 |
| Wastewater + Stormwater | $690 |
The funding gap in the water infrastructure will arise due to the IIJA Act funding ending in 2026 and current investment levels; hence, the ASCE recommended that the government take initiatives to introduce long-term investment plans to bridge the gap.
Apart from the investment gap, climate change, and unavailable data, there is a decline in the federal share of capital investment, and other factors are primary reasons that are challenging the water infrastructure in the US.
The federal support for the water systems in the US has increased over the years, contributing to the improvement. However, we need to pull more investment or adapt the financing methods that can support the water infrastructure funding.
