Asset Health in the Water Sector: US

Innovations for UK Challenges

Asset health is central to the delivery of safe and reliable water services. In both the UK

and the US, ageing infrastructure and growing environmental pressures have exposed

the need for more proactive asset management. These challenges highlight an

opportunity: learning from each other’s approaches to build a stronger, more resilient

sector.

The Asset Health Challenge in the UK

Asset health is central to the delivery of safe and reliable water services. In both the UK and the US, ageing infrastructure and growing environmental pressures have exposed the need for more proactive asset management. These challenges highlight an opportunity: learning from each other’s approaches to build a stronger, more resilient sector.

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The Asset Health Challenge in the UK

The recently published interim report by the Independent Water Commission (IWC) states that many UK water companies still lack a clear understanding of the condition of their assets. Funding for renewal and maintenance continues to be based primarily on past capital maintenance and instances of asset failure, rather than a forward-looking, risk-based assessment of future needs. It stresses the importance of shifting towards more proactive, prognostic asset health assessments that take into account future stresses such as climate change and population growth. Currently, the UK has no consistent, industry-wide resilience standards to help guide asset health, leaving a critical gap in the sector’s ability to plan and invest effectively.

The Commission sees a strong case for setting a forward-looking infrastructure resilience framework and standards at a national level for England and Wales respectively, with a consistent set of targets applied across all companies. This could include requirements on companies to make forward looking, prognostic, assessments of asset health and provide reports to regulators. Such assessments should inform company plans and funding in price reviews. A more supervisory approach to regulation could support this, including the regulator increasing its engineering capability and developing an in-depth understanding of a company’s asset base and investment needs.

Source: UK Government Independent Water Commission interim report

Data quality is another stumbling block. The accuracy of data around asset health has often been neglected in the UK, eroding trust in asset information. A new UK Water Industry Research (UKWIR) report highlighted this problem, offering a practical 2 of 12 www.mcceconomics.co.uk© www.linkedin.com/company/mcc-economics-ltd/ framework to quantify and improve data confidence in asset management decisions. Better data and prognostic analytics are essential if companies are to anticipate issues before they lead to failures. Overall, the UK water sector is grappling with ageing pipes and plants, patchy asset knowledge, and a culture of short-term fixes. These challenges underscore the need for a more proactive, strategic approach – and they create an opportunity to learn from how others have tackled similar issues. Nevertheless, it's not all bad. On leakage, Ofwat say that the water utilities in England and Wales leak less (per person per day) than those in Scotland and Northern Ireland, and that leakage has greatly reduced since privatisation (ignoring inconsistent collection and monitoring standards).

framework to quantify and improve data confidence in asset management decisions. Better data and prognostic analytics are essential if companies are to anticipate issues before they lead to failures. Overall, the UK water sector is grappling with ageing pipes and plants, patchy asset knowledge, and a culture of short-term fixes. These challenges underscore the need for a more proactive, strategic approach – and they create an opportunity to learn from how others have tackled similar issues

Nevertheless, it's not all bad. On leakage, Ofwat say that the water utilities in England and Wales leak less (per person per day) than those in Scotland and Northern Ireland, and that leakage has greatly reduced since privatisation (ignoring inconsistent collection and monitoring standards).

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Perspectives from the US: Ageing Infrastructure and Oversight

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ASCE’s 2024 Bridging the Gap economic study found that the projected gap between drinking water infrastructure needs and investments in 2024 stood at $309 billion and is expected to grow to $620 billion by 2043.

According to the EPA’s 2023 national needs assessment, America needs $625 billion over the next 20 years to reach a state of good repair. That is 30% more than its previous assessment in 2018.

Across the Atlantic, the United States faces its own asset health hurdles. Ageing infrastructure is a nationwide concern – particularly for the thousands ofsmall and rural water systems that dot states like Georgia and North Carolina. For context, more than half of America’s ~50,000 community water systems serve fewer than 500 people. These 4 of 12 www.mcceconomics.co.uk© www.linkedin.com/company/mcc-economics-ltd/ small systems often struggle with limited customer bases and resources, making it hard to invest in system upgrades or even retain qualified staff.

The fragmented nature of so many tiny systems means many communities have water networks barely viable on their own. This has reinforced the importance of robust planning and close regulatory engagement to safeguard long-term system viability. As one LinkedIn article noted, the challenges for small systems aren’t just financial – they also implicate health equity, since rural and lower-income populations disproportionately rely on these under-resourced utilities.

The nation’s water infrastructure is aging and underfunded. More than 9 million existing lead service lines pose health concerns, and in 2023, the Environmental Protection Agency (EPA) determined that the nation’s water infrastructure needs stand at $625 billion over 20 years. That exceeds EPA’s 2018 assessment by more than $150 billion.

Source: American Society of Civil Engineers (ASCE) 2025 Infrastructure Report Card

Drinking water infrastructure in the U.S. comprises more than 2 million miles of underground transmission and distribution lines. Some of the nation’s oldest pipes were laid in the 19th century, and pipes laid post–World War II have an average lifespan of 75 to 100 years, meaning that many of even the newer pipe segments are reaching or have reached the end of their design life. As of 2023, the average life expectancy of these pipes is just over 78 years, which is 6 years less than in 2018.

Across the US, asset health is shaped by a blend of economic regulation and environmental oversight. State-level regulation frequently emphasises not only environmental compliance, but also the financial health and engineering capacity of utilities. This approach creates a more direct link between the physical condition of assets and the funding needed to maintain them, encouraging a more proactive stance on infrastructure renewal.

US Practice

Several US practices stand out as relevant to the UK’s efforts to improve asset health in the water and wastewater sectors:

Consolidation in California

California has actively worked to consolidate smaller, fragmented water systems, recognising that this can help unlock investment for infrastructure renewal and ensure consistent, reliable service.a

The Sultana-Monson project – which included building new wells, laying piping and annexing Monson into the special district – was among those studied through a groundbreaking survey conducted by Kristin Dobbin, a University of California Cooperative Extension specialist in water justice policy and planning.

Dobbin is studying the consolidation of water systems, which can entail creating physical connections (such as pipelines) between water systems like in the Sultana-Monson project or administrative mergers that leave the physical infrastructure unchanged. About 250 consolidation projects have been completed across the state since 2015 – many of them in small, rural communities with tenuous access to safe and reliable drinking water.

“Water system consolidation has really become, in the last eight years, a top solution in California for addressing the chronic challenges facing smaller water systems,” said Dobbin, who is based at the UC Berkeley Department of Environmental Science, Policy and Management.

North Carolina’s Supervisory Engagement

In North Carolina, regulators engage directly with utilities, particularly smaller ones, toassess asset conditions and ensure that maintenance and renewal plans address bothcurrent needs and future risks

The North Carolina Utilities Commission is an agency of the State of North Carolina created by the General Assembly to regulate the rates and services of all investor-owned public utilities in North Carolina. It is the oldest regulatory body in state government. The present Commission evolved from the Railroad Commission which was created in 1891 and given authority to regulate railroad, steamboat, and telegraph companies.

Today, the Commission regulates companies that provide electricity (including electricity resellers), telephone service (including payphone service and shared tenant service), natural gas (including gas resellers), water (including water resellers), wastewater, household goods movers, buses, brokers, and ferryboats. To a limited degree, the Commission regulates electric membership corporations, small power producers, and electric merchant plants. The Commission is also responsible for administering programs in North Carolina to ensure the safety of natural gas pipelines.

The Commission does not regulate telephone membership corporations, cable TV, satellite, commercial mobile radio service, cellular, pagers, or data and internet service providers.

Infrastructure Renewal Emphasis:

Both investor-owned and municipal utilities in the US increasingly integrate asset renewal strategies with environmental and economic goals, fostering a culture of proactive maintenance.

While there is no single national asset health standard in the US, these state-level examples show how regulatory frameworks can incorporate engineering expertise and a strong focus on asset health

Lessons and Opportunities for the UK

For the UK, the key lesson is the need to move from reactive maintenance driven by past failures to proactive, forward-looking assessments of asset health. As the IWC report points out, without such a shift, the sector will struggle to cope with the combined pressures of climate change, population growth, and evolving environmental standards.

1. Supervisory Regulatory Approach

What exactly is a supervisory approach and are US regulators more supervisory than those in the UK? One of the arguments found in the IWC report is that the UK economic regulation must evolve beyond industry-wide benchmarking to include deeper, company-specific engagement. The IWC report may suggest that a more hands-on supervisory approach could help ensure that UK water companies have robust asset renewal strategies tailored to their unique challenges

2. Encourage Strategic Consolidation:

While the UK’s context is different (with regional monopolies rather than thousands of tiny utilities), there are still opportunities to consolidate or share resources where fragmentation exists. Small private water networks, housing development systems, or failing wastewater works in remote areas might be folded into larger companies or supported via regional alliances. It might be particularly beneficial to try to emulate the California model, which is meant to facilitate unlocking new investment and expertise for asset renewal in under-served communities through consolidation. UK regulators could identify candidates for such consolidation and provide incentives or removal of barriers for companies to take them on, thus reducing the tail risk of asset failures in outlying systems.

Source: Environmental Policy Innovation Center

3. Integrate Engineering Expertise in Regulation:

One striking insight from the U.S. is how some regulatory bodies explicitly include engineering assessments in their economic oversight. In practice, this means requiring standardised asset condition reports, certification of asset management systems, or even on-site inspections by engineering teams.

The UK is already hinting in this direction - Ofwat’s latest update paper on asset health (July 2025) outlines a plan to develop priority asset categories (like service reservoirs, boreholes, filters, sewers) and gather data to inform targeted investment allowances. Embracing these requirements could professionalise asset oversight across all companies, ensuring technical rigour in how assets are maintained. It directly injects asset health into boardroom discussions, as companies will need to demonstrate to regulators that they are meeting these standards or face consequences.
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4. Embrace Nature-Based Solutions:

Nature-based solutions, like the RainScape initiative in Wales, can contribute to this effort by reducing stress on traditional assets, by managing rainwater and improving the surrounding environment. These solutions provide additional capacity and resilience by absorbing storm water and filtering pollutants naturally. In fact, rain gardens alone can reduce the amount of pollution entering waterways by up to 30% more as compared to a conventional lawn by filtering runoff. See example post here.

Such approaches improve community resilience and environmental outcomes at the same time as they prolong the life of pipelines and sewers (since less excess water and pollution are coursing through the system).

This mirrors practices in some US cities, where green infrastructure initiatives complement hard asset renewal by addressing storm water management and enhancing community resilience. Such approaches are an important part of a more holistic view of asset health that goes beyond pipes and treatment plants.

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5. Building a Resilient Future

Proactive asset health management is essential to future-proof the water sector, ensuring that it remains resilient, affordable, and environmentally sustainable. US practices, such as consolidation, regulatory engagement, and engineering-led oversight - offer valuable insights that the UK can adapt to close its asset health gaps. By learning from these experiences, the UK can build a water sector that not only withstands future shocks but also prevents certain issues from even arising.

Encouragingly, we’re already seeing movement in this direction. Of wat’s recent update paper and consultation signal a recognition that asset resilience must be front and center.

The IWC’s final report later this year is expected to solidify these themes with concrete recommendations. Ultimately, building a strong asset health culture will require collaboration – economic regulators, environmental agencies, water companies, and communities all have a role to play in redefining how we manage the infrastructure that delivers life’s most vital resource.

How is your organisation approaching asset health and infrastructure renewal? Have you seen innovative practices in your region that could inform UK regulatory efforts on promoting asset health?

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