State of Water and Wastewater Market
Presented by James Adducci, Managing Director, Capstone Partners
James Adducci, a WWEMA member and Managing Director for Capstone Partners, shared his perspective on the state of the water and wastewater market. He aimed to equip attendees with a financially grounded understanding of where the water and wastewater market stands today and how upcoming economic and industry shifts may shape opportunities and risks.
James discussed a series of trends in the sector consisting of water scarcity, aging infrastructure, water quality, and smart water. He contrasted these themes with the demand channels they interact with which consist of construction, agriculture, utilities, and industrial channels.
The focal point of was the funding needs and requirements of the sector that are not currently being met. There is currently a gap in funding that’s expected to double by 2030 and be roughly $200 Million off target. Strategies to close this gap involve maximizing state revolving funds, regionalization of smaller utilities, advancing technology, prioritizing long term infrastructure, and working on rate structure reform to better reflect operational costs.
There is also the issue of regulatory funding which James pointed out has not been a consistent driver of business volume. Operators are not taking advantage of this funding, and general sentiment is that if the funding went away many operators would continue business as usual. These funds need to be better taken advantage of moving forward and looked at as more than a tailwind.
James also made the point that the tariff situation can be used to increase prices and subsequently maintain them once the current tariff situation has run its course. These tariffs are a good opportunity to create profitability and sustain run rates. He then addressed digital infrastructure suggesting it should be approached as a fad for the time being. Investors are currently not bullish on digital infrastructure but the long-term implications of data centers and other increasing demands for water utilities in the technology sectors should not be ignored.
On the issue of aging workforce James suggested that shifting operational capacities to third-party providers could attract a younger workforce. He noted that third party providers often project a tech-forward image that appeals to new professionals.
The 2025 market was a stabilizing year as buyers and sellers became more comfortable transacting amid broader geopolitical uncertainty and higher tariffs. The private buyers’ market ticked up in 2025, however, public companies decreased their economic activity in the sector and remained conservative. Foreign buyers in the market also increased in 2025 as tariffs pushed companies to domesticize assets and involve themselves more directly in the U.S. market. James also pointed out that EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) multiples are continuing to rise in the energy power and infrastructure market which signals the demand for crucial utilities.
To summarize, water and its associated infrastructure is being valued as a premium asset now more than ever. Short-term impacts will be particularly rough on the sector for now and planning must be done accordingly. The deal volume is strong and will continue to remain steady as the projects in this sector can rely on a market that views them as a necessity. Corporate divestitures are starting to increase as bigger companies have identified assets below line that may have been acquired and not efficiently utilized, which will allow businesses on the smaller side to become more practical. Operators should take proactive steps to avoid paying significant premiums later and ensure they remain constantly transaction-ready.
Lastly, there are three things venture capital is interested in: real time sensing and monitoring, decentralized water generation, reuse and recovery. Operators should consider the fact that fiscally speaking, funding from the federal government is a tailwind when looking at the overall sector.