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 3,300 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.

Water Consumption Falls

Conservation efforts and concern for the environment have succeeded in reducing water consumption in the US.

Industry size & Structure

The average water supply and sewage treatment company employs 11-16 workers and generates $4 million in annual revenue.

    • The water supply and irrigation system industry consists of about 3,300 firms that employ about 38,600 workers and generate about $12 billion annually. The sewage treatment industry consists of about 340 companies that employ about 5,400 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
                                  Source: Vertical IQ and Inforum

                                  Recent Developments

                                  Mar 27, 2023 - EPA to Require Removal of “Forever Chemicals” from Drinking Water
                                  • In mid-March, the Environmental Protection Agency (EPA) announced it would require utilities to reduce levels of perfluoroalkyl and polyfluoroalkyl, a class of chemicals known as PFAS, in drinking water to near zero, according to The New York Times. Often referred to as “forever chemicals” because they do not break down and remain in the environment, PFAS exposure has been linked to asthma, liver damage, cancer, and thyroid and fertility problems, and other adverse health effects. Some industry groups complain compliance is complex and onerously expensive. The EPA projected annual costs for all utilities to comply would be about $772 million. However, the Association of Metropolitan Water Agencies estimates the cost at $43 million for a single facility. The new rule is set to go into effect after a 60-day period when the EPA will accept public comments.
                                  • The Biden Administration’s fiscal year 2024 budget includes requested funding for the Alternative Water Source Grant Pilot Program, which would be the first nationwide water recycling program in the US. Through the pilot program, the EPA would issue competitive grants to state, interstate, and intrastate water resource agencies to design, build, and test alternative water source systems, including water recycling. In 2022, drought conditions were moderate or worse in 40 states, according to the National Oceanic and Atmospheric Administration. The Alternative Water Source Grant Pilot Program would help communities develop more resilient water supplies.
                                  • Seven states that depend on the Colorado River for water failed to meet a federal deadline of January 31 to reach a deal for collectively conserving water amid the worst drought to grip the western US in more than 1,000 years, according to CNBC. Six of the states – Arizona, Colorado, Nevada, New Mexico, Utah, and Wyoming – released a “consensus-based modeling alternative” to the US Bureau of Reclamation. The plan includes a strategy for protecting Hoover Dam and Glen Canyon Dam infrastructure and power production while preventing Colorado River reservoirs from reaching “dead pool” - when water levels are so low they can’t flow downstream. California, by far the heaviest user of water among the seven states, wasn’t included in the modeling proposal, has said it will submit its own plan. If the states cannot reach an agreement, the Biden Administration may have to step in with its own conservation plan.
                                  • The Infrastructure Investment and Jobs Act (IIJA) and the Inflation Reduction Act (IRA) are helping to fund water projects through the Department of the Interior to improve water supply reliability and conservation projects in the Upper Colorado River Basin, according to WaterWorld Magazine. The IIJA provides $278 million for seven rural water projects in Iowa, Minnesota, Montana, New Mexico, North Dakota, and South Dakota. The Bureau of Reclamation is also allocating up to $125 million through the IRA to relaunch the System Conservation Pilot Program in the Upper Colorado River Basin, which will support water management and conservation efforts to protect the short-term sustainability of the Colorado River System.
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