Water Supply and Sewage Treatment
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 3,900 water supply and irrigation system companies in the US store, pump, treat, and deliver water to customers. The 340 sewage treatment companies operate sewer systems or sewage treatment facilities that collect, treat, transport, and recycle wastewater. The sale of water accounts for the majority of industry revenue. Large firms may offer both water supply and sewage treatment services. Some firms also offer other types of utilities, such as electric power or gas.
Aging Infrastructure and Funding Gap
The water and wastewater infrastructure in the US is aging, and many systems are nearing the end of their useful life and in desperate need of modernization and replacement.
Rising Rates
Despite public pressure to keep rates low, the water supply and sewage treatment industry has been able to raise rates consistently with healthy increases over time.
Industry size & Structure
The average water supply and sewage treatment company employs 11-18 workers and generates $4 million in annual revenue.
- The water supply and irrigation system industry consists of about 3,600 firms that employ about 39,500 workers and generate about $12 billion annually. The sewage treatment industry consists of about 330 companies that employ about 5,800 workers and generate $1.5 billion annually.
- The industries appear concentrated; the top 50 companies account for between 75% and 90% of industry revenue. However, government ownership (at the local level) skews the concentration percentage, and both the water supply and sewage treatment industries are more fragmented than Census numbers reveal.
- The majority of community water systems and wastewater treatment systems are government-owned. Just over 15% of Americans receive water through investor-owned water supply utilities.
- Large government-owned systems include the New York City and Washington DC systems. Large investor-owned firms include American Water, Aqua America, and United Water (Suez Environment).
- According to the EPA, approximately 90% of the US population obtains its water from community water systems and 10% obtains water from private wells. The US has 52,000 community water systems, of which 91% serve less than 10,000 customers. The US has 16,000 wastewater facilities that serve 80% of the population.
Industry Forecast
Water Supply and Sewage Treatment Industry Growth
Recent Developments
Sep 24, 2024 - EPA Announces Water Project Funding
- In September 2024, the US Environmental Protection Agency (EPA) announced the availability of $7.5 billion in water infrastructure funding through the Water Infrastructure Finance Act (WIFIA). The WIFIA program offers low-cost, long-term loans for communities to invest in the planning, design, and construction of water infrastructure projects. Through the WIFIA program, communities can defer repayment for up to five years after project completion, and multiple projects can be combined into a single loan. Localities can also customize repayment plans, which can span 35 years. September’s announcement marks the eighth round of WIFIA funding, including $6.5 billion through WIFIA and $1 billion through the State Water Infrastructure Financing Authority (SWIFIA).
- The total value of US sewage and waste disposal construction put in place increased by 0.5% in July 2024 compared to the prior month, according to the US Census Bureau. The value of US sewage and waste disposal construction was up 10.7% compared to July 2023. The total value of US water supply construction increased 2% on a month-the-month basis in July 2024 and increased 16.5% year-over-year.
- Government investments and aging infrastructure are expected to drive steady construction spending for water and sewage projects over the next several years, according to construction consultancy and investment banking firm FMI. Population growth and Infrastructure Investment and Jobs Act funding are boosting spending for sewage and water systems. Construction spending for sewage and waste disposal projects is expected to rise 8% in 2024 then drop to 0% growth in 2025 and 2026 before rebounding to growth of 3% in 2027 and 6% in 2028. Water supply expenditures will grow 9% in 2024, 7% in 2025, 4% in 2026, 2% in 2027, and 3% in 2028. The EPA estimates the US will need to spend $650 billion on drinking water infrastructure over the next 20 years.
- The water supply and sewage treatment industry is expected to experience flat but steady sales growth over the next several years. In 2024, industry sales growth is forecast to drop slightly to 4.5% compared to 6% in 2023, according to Inforum and the Interindustry Economic Research Fund, Inc. The water supply and sewage treatment industry will then post average annual sales growth of about 4.2% through 2028, according to Inforum and the Interindustry Economic Research Fund, Inc.
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