A new report by the Brookings Institution, a nonprofit think tank based in Washington D.C., explores critical gaps and opportunities in the United States’ water infrastructure funding, underscoring challenges faced by state and local leaders amid historic federal investments. With aging systems and mounting climate pressures, the country’s drinking water, wastewater, and stormwater infrastructure requires urgent upgrades. Federal initiatives like the Infrastructure Investment and Jobs Act and Inflation Reduction Act have injected unprecedented funding into water infrastructure, yet barriers persist in effectively deploying these resources.
State leaders manage State Revolving Funds (SRFs), federally funded loan programs that support clean and drinking water projects nationwide. With $43 billion allocated under recent federal infrastructure laws, they offer low-cost, flexible financing to local utilities. These funds are allocated through Intended Use Plans (IUPs), which outline project priorities. Although SRF funding has significant reach and impact, the analysis notes that economic development officials, policymakers, and other stakeholders often lack clarity on how utilities have access to these funds and collaborate with states to prioritize projects. In particular, the report reveals that many states lack clear frameworks to address climate resilience, equity, and affordability in their water investment strategies.
Despite widespread adoption of measurement and accountability practices — over 75% of states incorporate these in IUP goals — only half include climate-focused “green projects”, and less than a quarter address environmental justice concerns explicitly. States like Colorado and Washington stand out for integrating climate resilience and affordability into their planning.
Many states omit specific details when it comes to prioritizing and assessing water projects. Fewer than half of Clean Water SRF (47%) and just over half of Drinking Water SRF programs (61%) publicly share project priority lists distinct from their IUPs. As exceptions, Kentucky and Indiana detail green project criteria in their evaluations, while Pennsylvania and New Jersey describe equity-focused scoring criteria.
The report also identifies fiscal, technical, and staffing constraints as persistent barriers. Less than 29% of states account for staffing needs in IUP goals, and fewer than 40% assess such needs in annual reports. This shortage hinders local utilities, many of which lack the capacity to navigate SRF funding processes. Alaska’s focus on hiring engineering and program staff offers a proactive model to address these gaps.
Brookings emphasizes the urgency for federal, state, and local leaders to align strategies and bolster support for utilities, particularly through technical assistance and capacity-building efforts. Without addressing these structural challenges, the nation risks missing critical opportunities to modernize water systems and advance climate and equity goals.
