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Executive Summary

2021 Strategic Directions: Water Report

The year 2020 supplied no shortage of challenges yet provided the water industry with an opportunity to find new ways of doing business and collaborating. Black & Veatch’s 2021 Strategic Directions: Water Report examines the issues and trends impacting today’s water industry based on a survey of more than 200 stakeholders in the United States sphere of water, wastewater and stormwater.

From COVID-19 to Climate Change, Challenges Press Water Industry to Grow Resilience, Embrace Technology

With thousands of water utilities across the U.S., challenges run deep. Aging infrastructure remains the chief issue, prompting concerns about the resiliency of assets well past their prime. Climate change worries are driving difficult discussions about hardening the infrastructure — and how to pay for it — to withstand droughts, floods, wildfires or extreme shocks, such as February’s deep freeze in Texas that disrupted water services to millions.

The need for greater, more reliable cybersecurity is more pronounced, after hackers in February exploited a security vulnerability in a Florida water treatment plant’s operating system and tried to taint the local water supply. Thankfully, a plant supervisor, through his computer interface, noticed the hack in progress and intervened before any real damage was done.

Technology advances from process intensification to data analytics and artificial intelligence continue to light a way forward, helping utilities and industry optimize asset performance, reduce costs, save energy, achieve regulatory compliance and bolster security.

Such challenges and opportunities are at least familiar territory. The COVID-19 pandemic hit the industry in 2020 seemingly out of nowhere, creating uncertainty about safety and further straining the bottom lines of many water utilities. Yet, the sector as a whole rose to the challenge, demonstrating remarkable agility and adaptability through its front-line professionals in keeping the water flowing, true to its mission of delivering a clean, reliable and safe supply.

This 2021 Strategic Directions: Water Report details that backdrop and the complexities of the transforming U.S. water, wastewater and stormwater industries. Backed by expert analyses of responses to a survey of more than 200 U.S. stakeholders, the report brings into focus a sector challenged as always on multiple fronts while advancing “One Water,” the premise that integrated and holistic water resource management — the value of all water regardless of history — must be considered when drafting plans and making investment decisions.

‘Digital Water’ Holds the Key as Infrastructure Continues Aging

To little surprise, the aging of the U.S. water industry’s infrastructure continues to be a core issue. Three-quarters of survey respondents listed aging infrastructure as their foremost challenge, far outdistancing issues such as making the case for capital improvement programs (34 percent), system resilience (30 percent) and managing capital costs (26 percent).

Taken together, the issues magnify the case for digital water solutions as utilities need to “do more with less.” Leveraging digital technology provides the opportunity to harness data precisely, which leads to enhanced capabilities in tracking consumption, driving customer engagement, optimizing performance, driving efficiencies and prioritizing investment dollars. Greater sustainability and resilience through informed asset management and planning are the rewards, along with an invaluable, holistic view of the water system.

It’s undeniable that data can guide utilities to higher operational efficiency, greater performance predictability and better maintenance planning, along the way boosting insight about when, where and how much to invest in the systems. The opportunity to gather and integrate information using current data collection systems — combined with evolving next-generation, cost-effective sensors and smart devices — enables predictive analytics to detect leaks, forecast usage, reduce costs and everything in between.

2021 Water SDR Figure 2

But Black & Veatch’s survey finds that many utilities are missing out, conceding that they’re harvesting more data but lack insights about what to do with it all. Roughly two-thirds of respondents categorize their data management practice as robust and strengthening but not fully integrated, up slightly from a year earlier. An additional three in 10 respondents say their data is unintegrated and siloed, consistent with the 2020 survey. Just 5 percent called their data management robust and fully integrated.

In a separate question, half of respondents say they’re collecting lots of data but not effectively leveraging it to actionable information, down from 60 percent in 2020.

The bottom line: Siloed data keeps utilities from having a complete and clear picture of their assets and operations and how best to invest in them.

In addition to digital water’s influences on the water industry, our report examines:

  • Climate Change: Utilities and communities face an evolving challenge to harden their water, wastewater and stormwater infrastructure and assets against drought, flooding, wildfires and other weather-related disasters that appear to be gaining in terms of frequency and intensity as a result of climate changes. Impacts from climate change ranked fifth among respondents’ most significant perceived resilience concerns. By beginning or advancing the planning process for operational resilience in the near term, utilities can help to provide water security in the future.
  • Contaminant Removal: Many water utilities will have to upgrade their systems to meet new maximum contaminant levels (MCLs). The MCLs — namely per- and polyfluoroalkyl substances (PFAS), or so-called “forever chemicals” that don’t easily biodegrade. Momentum looks to be building at the state and federal levels (e.g., H.R. 2467, the PFAS Action Act of 2021) to study treatment technologies and establish limits for PFAS in water sources.
  • Tomorrow’s Infrastructure: More utilities are deploying digital capabilities, including digital mapping to catalog utility systems and assets, evidence that digital technology is taking a firmer hold across the water and wastewater industry. Work is happening that pushes past data analytics to introduce new opportunities in digital water, from treatment innovations to advances in Internet of Things (IoT) integration.
  • Politics of Water: The water and wastewater industry is chronically underfunded, and the value of water often is misunderstood and underappreciated. Hope is springing anew in the sector that significant, instrumental investments in water infrastructure may be on the horizon, given the new presidential administration’s proposal of a robust funding package.

COVID-19 and the Water Sector

Across the spectrum of water utilities, the COVID-19 pandemic’s impact was profound from the moment it began its sweep through the U.S. in early 2020.

Industries and businesses shuttered, forcing tens of millions of layoffs that, in turn, produced delinquencies in water bills, cutting into the revenues and cash flows of utilities big and small. By and large, they suspended water and wastewater shutoffs to past-due accounts, both as a humane gesture and as an acknowledgement of the importance of water and sanitation during a health crisis, regardless of one’s ability to pay. Some utilities forgave the unpaid amounts; others deferred them through extended payment plans.

Closures of big commercial and industrial (C&I) water customers adversely impacted utility revenues and cash flows as water demand shifted to residential areas, where displaced workers suddenly found themselves working remotely.

Two-thirds of respondents to Black & Veatch’s survey reported that the outbreak had at least a moderate impact on their day-to-day operations. But the sector weathered the storm and learned from it.

2021 Water SDR Figure 3

More than two-thirds of respondents credited COVID-19 for their organization’s increased consideration of technology, pointing to the pandemic-forced remote working practices of their employees. Thirty-two percent report giving more thought to customer engagement, with 29 percent saying they’re supporting increased remote operations and automation (Figure 3).

As the survey shows, utilities appear to be moving beyond their historical business activities and increasing their engagement with digital and electronic management approaches. Water, wastewater and stormwater utilities found that perhaps their data management wasn’t as robust as they thought during the operational challenges of COVID-19, inspiring them to ramp up efforts to harness and optimize use of information.

Despite its impacts, the pandemic amplified the opportunity and need to accelerate innovation in strategy, operations and funding to protect human health and the environment, along the way greasing the economic engine that comes from infrastructure investment.

More than ever, the industry is at a crossroads to invest in its systems, leverage new funding sources, collaborate with partners, plan its systems holistically and prioritize water as a way to revitalize, rejuvenate and equitably build our communities of the future.

Now is the time for the water industry to make change.

photo of Cindy Wallis-Lage

About the Author

Cindy Wallis-Lage is president of Black & Veatch’s water business, leading the company’s efforts to address water infrastructure needs around the world. A global champion for the world’s water resources, she advocates understanding water’s true value and promoting its resilience so that communities may achieve their social, economic and environmental sustainability goals. Wallis-Lage has been involved in more than 100 projects worldwide, helping public and private entities successfully develop, enhance and manage their water, wastewater and stormwater facilities and infrastructure.

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