While advancements in cybersecurity, new data collection and management systems, and innovations in resiliency drive the U.S. sector forward, the water industry is navigating a wave of other headwinds, including aging infrastructure and workforce, “forever chemicals” and questions around funding availability.
The Black & Veatch 2025 Water Report — based on expert analyses of a survey of 680 U.S. water industry stakeholders — shares a story of challenges mixed with opportunities. Among 63% of respondents, aging water and wastewater infrastructure remains the top challenge facing the industry, followed by aging workforce (39%) and funding or availability of capital (27%) (Figure 1). These concerns remain consistent compared to prior years, but this year’s survey also included cybersecurity at 9%, water supply at 18% and climate resilience and adaptation also at 18%. Newer challenges mean new opportunities for solutions-oriented thinking that ultimately benefits communities across the country.
With each new election cycle comes regulatory and funding changes that impact downstream water utilities. Currently, deregulation is anticipated, and the question on everyone’s mind is how utilities are responding. According to our survey, half of respondents do not plan to make changes to their priorities.
While most in the sector remain steadfast in their priorities, the potential of a changing tide of regulations and funding mechanisms continues to cloud the horizon for strategic planning requirements. It appears that half of utilities do not plan to make any changes based on potential relaxed regulations (Figure 2). As regulations have the possibility to subside, it appears many utilities are holding strong to previous guidelines that direct their processes.
As cyberattacks increase in severity and frequency, it is more important than ever for utilities to safeguard their communities and resources. Gone are the days when a cyberattack was only an informational technology (IT) threat; instead, more sophisticated attackers have figured out how to impact operational technology (OT) or industrial infrastructure.
As utilities look to protect their operations, they have one thing in mind: their community’s safety and public welfare (Figure 3). Ranked as one of the highest priorities among respondents, it paints a picture of utilities that are mindful of the importance of OT cybersecurity, far beyond just compliance (ranked fourth) or due diligence (in last place).
A robust cybersecurity program benefits water stakeholders across the country, including those depending on clean and reliable water as a daily necessity — i.e. everyone. With a further look into cybersecurity for the third year, this once-emerging want has become a crucial need.
As artificial intelligence (AI) becomes a growing part of our daily life, the need for hyperscale data centers accompanies it. The insight from AI and associated intelligence and efficiencies, including for water industry operations, requires increased water supply. Data centers generate heat and need water to cool them. As these data centers pop up across the country, water service providers are considering the implications of data center water requirements on community water planning. Increasingly, water utilities are in conversations with hyperscalers, colocators and ecosystem players on local requirements.
While data centers are top of mind for many, many respondents are not currently considering data center needs or are in locations where site planning is not active. More than half (54%) of respondents said “no” when asked if their organization has factored in the proliferation of data centers and technical manufacturer water needs into their short- and long-term resource planning. Is this number alarming, or are utilities just unaware of what they don’t know? (Figure 4)
The public has taken a closer look into the impact data centers have on water, but this doesn’t seem to have slowed the development of data centers. With a closer look at how water reuse can come into play, strides toward understanding alternative, more sustainable options may be the key in solving the data center water supply challenge.
While the regulatory landscape may shift in some areas, those involving PFAS remain surprisingly consistent — at least for now. In April 2024, the U.S. Environmental Protection Agency (EPA) announced the final National Primary Drinking Water Rule (NPDWR) regulating six PFAS. Under this regulation, utilities must test for, report on and mitigate PFAS contamination if present in levels that exceed the set-forth maximum contaminant levels (MCLs). While campaign promises and early-term federal cuts may decrease the EPA’s power, regulation around PFAS remains intact.
With 46% of respondents noting that PFAS has been detected in their water supply, the time to act is now (Figure 5). But, it won’t be cheap. A study conducted by Black & Veatch on behalf of the American Water Works Association (AWWA) estimated the national cost for water systems to install treatment to remove
perfluorooctanoic acid (PFOA) and perfluorooctanesulfonic acid (PFOS) exceeds $3.2 billion annually. Those costs comes out of the wallets of ratepayers, and with rising costs across the board, there will inevitable frustration.
As presidential administrations change, so does the regulatory landscape. The survey for this report was conducted in February 2025, just a few weeks into the new administration, providing a snapshot of how utilities were responding to new changes in funding, policy and investment planning.
The data reinforced how water utilities remain true to their mission of delivering safe and reliable water — along with responsibly managing wastewater and stormwater. As the industry evolves, they are looking for innovation and ways to harness data to bolster their resilience. It comes at a time of challenges such as climate change impacts, increasingly sophisticated cyber attackers, the rise of hyperscale data centers and contamination threats.
A bolder vision for utilities and those helping guide them will be the name of the game in ensuring a clean, reliable and sustainable water supply for their customers and communities.
