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 3,700 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 11-18 workers and generates $4 million in annual revenue.

    • The water supply and irrigation system industry consists of about 3,400 firms that employ about 38,800 workers and generate about $12 billion annually. The sewage treatment industry consists of about 320 companies that employ about 5,700 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

                                  Jan 25, 2024 - EPA Moves to Eliminate Lead Pipes
                                  • In December 2023, the Environmental Protection Agency (EPA) announced a ten-year program to replace virtually all the lead water pipes in the US, according to Construction Dive. According to The New York Times, the plan would eliminate about 9 million lead pipes and cost between $20 billion and $30 billion. Funding for lead pipe replacement includes about $15 billion from the Infrastructure Investment and Jobs Act and $11.7 billion from the Drinking Water State Revolving Fund. The American Rescue plan also includes a $350 billion Local Fiscal Recovery Fund that can be tapped to help pay for lead pipe replacement.
                                  • In December, Fitch Ratings cited easing inflationary pressures when it said it had upgraded its outlook for the US water and sewer for 2024 to “neutral” from “deteriorating.” Water utilities’ costs increased 3% in 2023, which followed a 6.5% rise in 2022. While water utilities’ costs associated with labor, chemicals, supplies, and power are not expected to drop, the rate of increase is expected to moderate further. Fitch stated that utilities have largely worked higher operating and capital costs into their budgets. However, the rating agency said extreme weather events and cyberattacks remain potential sources of unforeseen expenses for water and sewer utilities.
                                  • According to recent reporting in The New York Times, a patchwork of state rules regulating groundwater use makes it difficult to police the country’s dwindling aquifer resources. Most states don’t know how many wells they have, and some have spotty data for older wells, many of which pump large amounts of water. Several states don’t keep track of household wells at all. Some areas have come to rely more on groundwater for drinking water as climate change has led to hotter weather and drought, making surface water in streams and rivers less reliable. About a third of the US’s water supply comes from groundwater, and climate change has increased agriculture’s groundwater use. The federal government has mostly left groundwater regulations to the states, primarily because they have historically been misunderstood.
                                  • In September, the US Environmental Protection Agency (EPA) announced a fresh round of funding under the Water Infrastructure Finance and Innovation Act (WIFIA). Through the latest round of funding, the EPA will provide $7.5 billion in low-cost, long-term loans for drinking water, wastewater, and stormwater infrastructure projects. The EPA prioritizes water investments in economically stressed communities, replacement of lead water service lines, addressing per- and polyfluoroalkyl (PFAS) and other water contaminants, and mitigating the effects of drought. The WIWIA was passed in 2014 to provide low-cost credit assistance to projects with regional or national significance.
                                  Get A Demo

                                  Vertical IQ’s Industry Intelligence Platform

                                  See for yourself why over 60,000 users trust Vertical IQ for their industry research and call preparation needs. Our easy-to-digest industry insights save call preparation time and help differentiate you from the competition.

                                  Build valuable, lasting relationships by having smarter conversations -
                                  check out Vertical IQ today.

                                  Request A Demo