The U.S. water sector has built its success on a steady playbook: plan long, invest steadily and optimize assets through time—but that playbook is showing its limits. Conditions are changing faster than the system was designed to absorb, and utilities are feeling it in every part of their operation.

The findings in the survey-driven “Black & Veatch 2026 Water Report” (www.bv.com/en-US/resources/water-report) show a sector that’s adapting, investing and innovating in real time. They also point to something bigger. The next phase of water infrastructure will be defined less by how well utilities optimize individual assets and more by how well they orchestrate the whole system: funding, planning, data, infrastructure and the people who depend on it all.

From ‘Doing More With Less’ To Making Different Decisions

“Doing more with less” still defines the industry mindset, but it undersells what utilities are actually navigating. Every familiar pressure point still is there, and new ones are stacking on top.

Industrial demand is the clearest example. A decade ago, the scale of today’s industrial water requests would have been an outlier. Today, it's the planning baseline. Utility confidence in providing water supply and capacity to a large new industrial customer has dropped from 73 percent in 2024 to 60 percent in 2026. For systems built on long-term planning, that’s a meaningful drop in a short window.

The takeaway is straightforward: demand is arriving faster and is larger and harder to forecast than the system was built to handle. Incremental fixes will not close the gap. The job has moved from optimizing individual assets to coordinating the entire system.

Financial Constraints Are Now Strategic Constraints

Funding has always been a constraint. What’s changing is how much it shapes the decisions, not just the deliverables. Forty-five percent of respondents expect funding to fall short of their infrastructure needs during the next decade, and that gap now is influencing how plans get built in the first place.

Capital prioritization, rate strategy and financing decisions have become inseparable. Utilities are moving away from uniform rate increases toward adjustments tied directly to capital programs and operational needs.

That reflects a real shift: financial strategy is becoming part of engineering decision-making, not a step that happens after the engineering is done. It also introduces new complexity. Affordability concerns and public resistance to large rate increases can alter project outcomes regardless of technical need.

In this environment, orchestration means bringing funding, planning and stakeholder engagement into the conversations up front while projects are still being shaped.

Regulation Is Accelerating Decisions

According to the Black & Veatch survey, 61 percent of respondents now say regulatory changes are driving capital planning either significantly or moderately, which puts regulation squarely in the planning conversation rather than at the end of it. Cost has overtaken uncertainty as the top barrier to action. On PFAS specifically, 31 percent point to budget and ratepayer impact as the greatest limiting factor. Even so, 35 percent are already planning or implementing PFAS treatment, often ahead of formal deadlines.

That’s a meaningful change in posture. Utilities are managing regulatory risk proactively, which means they need an operational model built for movement. Plans must flex as rules evolve, while still delivering near-term performance and compliance. That puts a premium on stronger integration across planning, engineering and operations.

Infrastructure Is No Longer the Bottleneck

Conveyance and storage are becoming real limiters. Only 47 percent of respondents say their storage systems fully meet performance targets, and just 24 percent have full transmission redundancy. Those are system-wide constraints that touch resilience planning, capital sequencing and the ability to support industrial growth.

Supply strategies are expanding, too. Reuse, conservation and aquifer recharge are all moving forward, and each of these depends on the ability to move and store water when it’s available.

That’s where orchestration earns its keep. A diversified supply portfolio without matching investment in conveyance and storage delivers a partial answer. The system must be planned and operated as one connected network.

Digital Is Everywhere, Insight Is Not

Digital water shows the gap between potential and execution more clearly than any other area in the report. Seventy percent of respondents say they’re collecting enough data; only 19 percent say they’re using them effectively.

The investments are there. Monitoring, analytics and asset-management systems are in place at most utilities. The problem is that the data sit in silos across departments, making it difficult to turn information into coordinated decisions. The downstream effect is real: capital priorities get harder to set, operations get harder to tune and risk gets harder to quantify.

As experienced staff retire, that institutional knowledge gap widens the divide.

Digital tools solve this when they’re built into how decisions get made. That’s what orchestration looks like on the data side, aligning systems, workflows and the people using them so information consistently drives action.

Industrial Demand Is Rewriting the Planning Equation

The rapid rise in industrial water demand is one of the most consequential trends shaping the sector. Large-scale manufacturing, data centers and other high-volume industrial users are introducing demand patterns defined by scale, speed and variability. One-third of utilities reported capacity constraints or operational stress tied to those customers in the last year alone.

Planning practices are catching up. Seventy-two percent of respondents now factor industrial demand directly into their resource planning, a clear move away from treating it as a flat percentage of overall use.

Pricing is moving with it: 37 percent of respondents are planning changes to industrial rate models. The larger implication is strategic. Industrial demand has become a primary driver of infrastructure planning, supply strategy and economic development for many utilities.

Meeting that demand requires coordination across utilities, regulators, industries and communities that host them. That’s orchestration in practice.

Resilience Is the Goal, Execution Is the Gap

Resilience has emerged as the defining theme connecting the sector’s priorities. Sustainability is a strategic focus for nearly 80 percent of respondents, and vulnerability assessments now are widespread. The harder part is closing the gap between planning and execution. Sixty-eight percent have completed vulnerability studies, but only 18 percent have developed integrated “one water” plans. Funding is the most-cited reason for the lag.

The lesson is that resilience doesn’t come from one-off projects. It comes from coordinated, sustained programs through time. That means aligning long-term planning with capital investment, operations and financial strategy, again pointing to the need for orchestration.

The Path Forward: Coordinated Systems, Not Isolated Solutions

The findings from the “Black & Veatch 2026 Water Report” don’t describe a sector in crisis; they describe a sector in transition.

Utilities are making measured, strategic decisions about where to act and where to wait. They are prioritizing investments, adapting to uncertainty and rethinking how infrastructure is planned and delivered.

No single technology, funding mechanism or regulation will define the next phase of water infrastructure; coordination will.

In practical terms, that means linking integrated financial planning to capital prioritization and rate strategy, building regulatory foresight with operational flexibility, connecting data systems to the people making the calls, planning infrastructure as interconnected systems rather than individual assets, and engaging industrial users and communities into the conversation early.

The shift from optimization to orchestration is the work ahead. With demand accelerating, uncertainty here to stay and resources tight, success will come from how well utilities coordinate what they already have.