U.S. Water Industry Outlook Survey Results Announced
WeiserMazars, LLP has released the results from their first annual water industry outlook survey.
WeiserMazars LLP, a leading accounting, tax and advisory services firm, recently announced the release of its first annual U.S. Water Industry Outlook survey. In the survey, participants were asked to predict the future of the industry over the next three to five years. Of those participants, 71 percent expect to see significant consolidation through acquisitions of smaller utilities by larger investor owned utilities within that timeframe.
Although consolidation of the U.S. water industry through privatization or semi-privatization has been anticipated, negative public perception of the privatization of this essential public service has prevented consolidation from taking place. Externalities are changing this attitude since access to financing becomes more challenging for municipalities. Raising taxes becomes the only alternative, but an unpopular option. Many states are enacting public-private partnership legislation, which is paving the way for consolidation to take place.
“The water industry has attracted a lot of private capital during the past few years because of its stability relative to other investment opportunities,” said Jerome Devillers, Head of Water Infrastructure/Project Financing. “Our study shows the time is ripe for consolidation to take place.”
The respondents also stated that fragmented structure of the industry has a negative impact the ability to raise capital for infrastructure upgrades. According to the survey, 45 percent of the participants consider their local water facilities as old to very old, while no one categorized their facilities as new.
Recognizing the danger of a crumbling water infrastructure, 50% of public and private entities are increasing their capital expenditures by up to 5%. While respondents predict that capital spending for water delivery and wastewater treatment infrastructure will continue to increase until 2040, the needs versus capital spending gap is expected to grow at a faster rate.