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KEY POINTS
A warming climate is increasing the risk to water infrastructure.
The U.S. recorded a record number of billion-dollar weather disasters in the last three years.
Weather hazards, combined with aging infrastructure and rising costs, are raising the cost of supplying water.
When the Eaton Fire blitzed central Los Angeles County in January 2025, the foothills community of Altadena sat in its path.
Burning more than 14,000 acres in and around the southern edge of Angeles National Forest, the fire concentrated its structural damage in an area of Altadena served by Las Flores Water Company, a small drinking water provider.
By the time the flames were extinguished, the water company sustained substantial losses that its customers will cover with expensive surcharges. The Eaton Fire destroyed the private utility’s two reservoirs and about three-quarters of its customers’ homes. More than a year later, effective April 1, the utility instituted a $3,000 surcharge per household, to be paid on the water bill in $50 increments over 60 months. Residents with savings can make a single $2,600 payment upfront.
Failure to pay means either a dramatic household or business disruption. Water service will be cut off. For Las Flores, the funds are intended to be a lifeline, keeping the utility from bankruptcy as it repairs its reservoirs while maintaining day-to-day operations until more residents return and revenue rebounds.
For residents whose lives have already been upended, the surcharge also represents an unwelcome expense.
“Such an action is not taken lightly, and we recognize that the imposition of this flat fixed fee may have economic consequences for some of you,” John Bednarski, the board president, wrote in a September 2025 letter to customers.
These consequences of a climate-related emergency in the Los Angeles foothills are emblematic of the terrible toll being exacted nationwide not just on land and property, but also on essential duties of government, like supplying water. Las Flores is just one calamity among many in recent years. The number of weather disasters causing more than $1 billion in damages in the United States is climbing. According to Climate Central, the last three years have had the highest number of billion-dollar disasters. The vicious storms, floods, freezes, and droughts have destroyed homes and killed hundreds of people. They are also endangering water supply and reliability as well as municipal and residential financial well-being.
Hurricane Helene in western North Carolina, in 2024, wrecked dozens of water and wastewater systems and prompted $861 million in state and federal funds to rebuild them. The Hermit’s Peak-Calf Canyon Fire outside Las Vegas, New Mexico, in 2022, so damaged a watershed with ash and debris that the city’s water treatment plant could not function. It is being replaced thanks to a congressional appropriation. Persistent drought today threatens southern Texas, where Corpus Christi nears a water catastrophe due to depleted reservoirs.
A warming planet is magnifying these and other physical risks to water infrastructure while also increasing the cost of recovery. This environmental upheaval is set against a backdrop of increasing economic pressures for water utilities and challenging financial conditions for their customers.
Aging pipes and treatment plants need to be replaced. By one estimate the national need for drinking water, wastewater, and stormwater over the next 20 years is $3.4 trillion, or $168 billion annually in capital spending. New federal regulations for lead and PFAS are an expensive outlay. Additional costs since the pandemic came first in the form of supply chain snarls and rapid inflation, then moved higher with the Trump administration’s tariffs. Rising interest rates and more costly energy and treatment chemicals – all these factors add up. The result is that utilities have raised customer water rates, which have outpaced overall inflation for years. Water and sewer bills rose 24 percent over the last five years in 50 large cities, according to Bluefield Research.
Utility leaders have taken notice of the headwinds. Among the top challenges identified in this year’s State of the Water Industry survey from the American Water Works Association were aging infrastructure, securing financing, rising cost of treatment, and extreme weather.
“Climate variability is one of the most significant and challenging risks to water supplies and water sector infrastructure,” the report notes.
Management failures in the face of environmental pressures have financial consequences. Earlier this month, S&P Global Ratings downgraded the credit rating for Corpus Christi’s municipal utility from AA- to A. The lower rating will increase borrowing costs for the city just when it needs money to navigate a water-supply crisis. To justify the downgrade, the ratings agency cited the city’s drought risk, water restrictions, and high capital needs to acquire additional water supplies. Corpus Christi is planning at least $1 billion in water infrastructure and supply investments, which include groundwater pumping, brackish groundwater treatment, recycled water, and potentially seawater desalination. The city’s two main reservoirs are 8 percent of capacity combined as of May 15.
State and federal dollars often fill the breach after a weather disaster. But the need is far greater than the available funds. North Carolina awarded $861 million in state and federal grants to 217 drinking water and wastewater projects after Hurricane Helene. But more than $600 million in applications were not able to be fulfilled, according to Gov. Josh Stein.
“We need substantially more federal support,” Stein said on May 14 while visiting Canton, a town in western North Carolina that was flooded during Helene. With $24.5 million in state and federal funds, Canton is rebuilding its water and sewer infrastructure.
Canton is one of the lucky ones. The increasing number of weather disasters for water utilities comes at a time of federal disengagement and funding uncertainty, note Rebecca Anderson and Shannon M. McNeeley of the Pacific Institute.
The Trump administration cancelled a multibillion-dollar FEMA grant program for climate-resilient infrastructure before being ordered by a U.S. district judge to reinstate it this spring. The Infrastructure Investment and Jobs Act, the Biden-era law that provided an extra $43 billion for water infrastructure, expires this year with no replacement in sight. A federal pandemic-era program to assist low-income households with their water bills has also expired. Water utilities are urging Congress to resume the program so that they can upgrade their systems without worrying that the cost will burden their poorest customers. House Democrats introduced the Water Access and Affordability Act in April to reauthorize the program.
“Without sufficient federal disaster mitigation and recovery funding, states and communities shoulder a disproportionate share of response, recovery, and preparedness costs,” Anderson and McNeeley write. “This burden is often especially heavy for small and rural water systems with limited revenue.”
Floods, droughts, wildfires, and hurricanes have always wrought destruction and water-supply desperation. Superstorm Sandy, in 2012, knocked out wastewater plants in eight states, leading to the release of some 11 billion gallons of raw and partially treated sewage. In New York City alone, the damage to wastewater facilities totaled more than $100 million.
But with the rising number of disasters and the increasing intensity of storms and droughts, more financial demands are challenging not just individual water utilities but assumptions about who is at risk.
No utility, even those on apparently solid financial footing, should be complacent, said Greg Pierce, a California water system expert at the UCLA Luskin Center for Innovation. Just look at Las Flores Water Company and its neighbors in Altadena.
Before the Eaton Fire, “none of these systems were on anyone’s list of small or underperforming systems, even within Los Angeles County,” he said.
Featured image: Crews work to extinguish the Eaton Fire, in Los Angeles County, in January 2025. Photo courtesy of Cal Fire