The American Water Works Association (AWWA) has released its 2026 State of the Water Industry (SOTWI) Report, which shows that infrastructure renewal and replacement is the top challenge among water sector professionals. Financing for capital improvements followed behind at No. 2.
The annual State of the Water Industry report is compiled from data collected via a voluntary, anonymous survey of water and wastewater professionals.
The survey for the 2026 report was conducted between Sept. 21 to Oct. 31, 2025, from a total of 2,171 respondents. About two-thirds of respondents were from water utilities with at least 11 years of experience and at systems with more than 10,001 connections.
Consistent Priorities
In 2025, the top issue on the report was financing for capital improvements. AWWA noted that those top two priorities — aging infrastructure and financing — have toggled back and forth at the top of the list of concerns for water professionals and executives for years. Recently, both issues have taken on increasing urgency as systems continue to age and regulations evolve.
“Water utilities are operating in a fundamentally different financial environment than ever before,” said AWWA CEO David LaFrance. “Aging infrastructure, new regulatory requirements, workforce availability, and emerging contaminants are colliding at the same time — and communities are feeling the financial tensions.”
AWWA report: Persistent, growing funding gap to test customer affordability
The report also addressed uncertainty in the water sector amid compounding challenges. Survey respondents are asked to rank what the state of the industry will look like five years from now on a 1 to 7 scale. The results this year were the lowest rating in eight years. AWWA said the state is another data point that shows the sector is holding steady in the present but increasingly uncertain about its capacity to withstand mounting pressures like aging assets to climate disruptions.
“Despite mounting challenges, water professionals continue to deliver safe, reliable water every day,” LaFrance added. “This report reflects a sector that is adapting, innovating, and doing more with less — even as the demands placed on our systems continue to grow.”
Other Concerns
Other top concerns from water sector professionals in the State of the Water Industry report were:
- Long-term drinking water supply availability. One-third of utilities (33%) report that they are “borderline,” meaning that an increase in withdrawal or a decrease in supply could result in water stress.
- Financial sustainability. Less than half of utilities (43%) are very to fully able to cover the costs of operations through rates and fees.
- Public understanding of the value of water sector systems and services. Among a list of 18 water system objectives, addressing customer service expectations ranked number five.
The report also includes water sector leaders’ thoughts on generative AI, cybersecurity, and climate variability, among other topics.
AWWA has published the State of the Water Industry report since 2004. The full report and a corresponding executive summary are available on AWWA’s website here.
More from AWWA
Another recent report from AWWA — “Beyond the Replacement Era: Balancing Compounding Infrastructure Needs with Household Availability” — revealed a growing funding gap for drinking water infrastructure, with needs exceeding $2.1 trillion over the next 25 years.
According to the analysis, this will require a 168% annual increase in capital investment. Homeowners’ water bills could double in that time before accounting for inflation, the report said. AWWA said the ‘Beyond the Replacement Era’ report it is the most comprehensive assessment to date of the investments needed to sustain safe, reliable drinking water service through 2050.
Source: AWWA
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