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
Recent Developments
Mar 27, 2024 - Industry to Notch Slow, but Steady Growth
- 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 4.38% compared to 4.44% 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 2027, according to Inforum and the Interindustry Economic Research Fund, Inc.
- Population growth, increased government infrastructure investments, and rising industrial production are expected to boost construction spending for water, wastewater, and sewage treatment projects over the next several years, according to construction consultancy and investment banking firm FMI’s First Quarter 2024 North American Engineering and Construction Industry Overview. In 2023, the EPA said drinking water infrastructure would require $649 billion in investment over the next two decades. About two-thirds of the investment will be for water transmission and distribution system repairs, followed by water treatment and storage. Spending for water supply projects is expected to rise 8% in 2024 compared to the year before, then grow by 3% in 2025 and 2% in 2026 and 2027. Construction spending for sewage and waste disposal projects is forecast to rise 11% in 2024 over 2023 levels, then moderate to 3% in 2025 and 1% in 2026 and 2027.
- In March, a group of water sector trade associations testified before the Senate Environment & Public Works Committee to protest a proposal the EPA is considering to classify certain per- and polyfluoroalkyl substances (PFAS) as hazardous substances under the Comprehensive Environmental Response, Compensation, and Liabilities Act (CERCLA). PFAS, often called “forever chemicals,” don’t break down in the environment and are thought to lead to health problems. The five water industry groups, called the Water Coalition Against PFAS, argued the strict legal liabilities under CERCLA would make water system operators potentially liable parties for simply processing water that contains PFAS due to industrial contamination. Water Coalition Against PFAS urged Congress to act to protect water utilities and their customers from the financial burden of funding PFAS cleanup efforts.
- 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.
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