[00:00:00] Speaker A: 14.
That's how many showers the average person in Brazil takes every week.
That's two a day. Nearly triple the global average.
For me, it's a reminder that behind every shower is a massive network of pipes and treatment plants, infrastructure that takes billions and billions of dollars to maintain and upgrade every year.
I am Reece Tisdal and this is if you're Future of Water in which we talk about all the ways which companies, utilities and people are addressing the challenges and opportunities in water. This is episode 127 and I have a good feeling it's going to be a great one. That's because today I'm joined by Bluefield senior analyst Charlie Seuss who's going to help me dig into Bluefield's most recent analysis of municipal utility capital improvement plans across the US and Canada.
These CIPs as they're called in the analysis that Bluefield has looked at captures more than 770 utilities and over $400 billion in planned investment through 2034.
Why do I like this topic? Because it gets right at some of the critical questions shaping the water sector.
Where are utilities prioritizing their dollars? That's pipes, treatment plants, stormwater resilience.
How do inflation tariffs, federal stimulus play into the rising capital budgets that we're seeing? If at all, then why is this data? The Bluefield's team of water experts is segmented into 35 different categories. Why is it so valuable? Why do clients of Bluefield appreciate the value that this provides?
But before we get to Charlie, you're going to have to bear with me just a little bit longer. One thing that caught my eye this past week.
Saudi Arabia's plan to host the 2029 Asian Winter Games.
And what really grabbed me wasn't the snow skiing in the desert, it was the water. The water needed for this project.
Trojena.
If I say it incorrectly, apologies. The futuristic ski resort at the heart of the project is supposed to have a massive man made lake to support it. To fill it, they're going to need two years of nonstop pumping. The 1 meter wide pipeline moving seawater 200 kilometers inland and upwards about 2.6 kilometers uphill from the Red Sea. And once that's done, the slopes themselves, about 30 km of ski runs, will depend entirely on artificial snow. Snow made from it sounds like desalinated water. Because it's a country that has no rivers, costs are staggering. Just building the lake comes in at about a $4.7 billion price tag and it sounds like it's going to be part of the $500 billion mega project called NEOM that we've heard about in the news. So when I talk about adaptation to new realities, such as climate, such as the future of water, this is not exactly what I had in mind.
Change of gears a little bit. It's that time of year, it's conference season, and I thought I'd throw out a couple of places that Bluefield's team of water experts is going to be over the next month or two.
There are more than this, but here are five spots that you can find us around the world over the next month, month and a half. Rethinking Water in New York. It's being put on by Science Water. It will be held at Columbia University September 25th. So this is where finance and policy leaders debate the future of water investment during New York Climate Week. Also, just I'll throw this in there. My podcast colleague Dave McGimpsey from the Water Values Podcast is also going to be there as well. So you can find both of us there if you're interested. Secondly, Weftech, this is the big daddy in the US that's going to be 27th of September to October 1st in Chicago. Whole group of Bluefield colleagues will be there.
NAWC Water Summit, that's the national association of water companies, 29th of September to October 1st in Miami is where private utility executives align on strategy, regulation and growth. I believe my colleague Greg Goodwin will be there.
Polyutech, if I said that correctly, that's October 7th to 10th in France.
We'll have colleagues there as well. And then last on the list, number five, is the IDRA. That's the International Desalination and Reuse Association. IDRA Congress in Iceland from the 12th to the 14th of October. And that'll be a discussion on desalination and water reuse technologies. And my colleague Keith Hayes will be there speaking on what sounds like to be a number of different panels. So if you want to learn more about these events and others, and you can also set up a
[email protected]. we do have an events page. I think it's in a dropdown in the banner. Go there, give us a look, set up a meeting. It's an easy opportunity. There'll be a number of different Bluefield colleagues around the world over the next month and a half for you to take advantage of. So look forward to seeing you wherever and whenever it happens.
All right, I'm here with Charlie Seuss. Charlie, welcome back to the Future of Water podcast. How's it going.
[00:05:21] Speaker B: Going well. I think it's been a minute since my last podcast. So excited to be back.
[00:05:25] Speaker A: That's really been that. I guess Amber Walsh has been taking over the airwaves, quite honestly, talking about data centers. People can't get enough of that. But. All right, so with that being said, let's talk some infrastructure today.
And the reason I asked you to join is I'd like to talk a little bit about capital improvement plans for municipal utilities across the US And Canada.
Bluefield just put out a report. All right. Should I say a presentation? It's kind of light. It's quite honestly, it's not just for clients. It's free, it's complimentary.
Free is another way to put it for anybody out there wanting to download it. But the analysis and the data behind it covers hundreds of utilities over $400 billion in plan spending through 2034. So what I'm hoping to do with you today is maybe just walk through a little bit of it, like how did we do it? Why do we do it? And then talk about some of the findings and some of what does the data tell us that we combed through over the past couple months.
So with that being said, Charlie, let me throw it at you. Why did Bluefield, why did our team undertake this capital improvement plan analysis?
[00:06:34] Speaker B: Yes, so it's something we've been doing for what, like four years now. And essentially these documents are kind of roadmaps for the billions of dollars in investment. It's a quantitative look into the priorities and funding expectations and for utilities and also reflects the regulatory pressures they're facing in many ways.
So companies across the value chain have come to us asking, where are my customers, what projects align with my products, and what are the budgets available for these different types of spend? And so the analysis that we do translates basically utility plans into market intelligence for technology providers, engineering firms, investors and other types of companies.
Then what we do is try to standardize and organize the very kind of fragmented reporting into consolidated, clear and easy to compare data set.
[00:07:31] Speaker A: All right, and so these CIPs, capital improvement plans.
So can you give me a quick definition, like, what are they for an outsider who doesn't understand the water sector or know what they are, what are they?
[00:07:42] Speaker B: Yeah, good question. So it's ranges utility to utility.
Even neighboring cities will have vastly different looking capital improvement plan documents. But essentially it's laying out the planned spend for capital improvements for water, wastewater, stormwater, utility over the next one to five to 10 years, depending on their budget timeline. So what we do Is each year our list of utilities that we look at grows. This year I think it was 777 utilities across all US states, plus DC and eight Canadian provinces.
This amounts to about 35,000 or more capital projects we've classified into nine different categories and then 35 subcategories across water, wastewater and stormwater.
This is all built from a bottom up view or review of CIP documents that we've scrubbed and standardized and kind of offers both big picture trends as well as the project level detail that a lot of our clients are looking for.
[00:08:50] Speaker A: Super interesting because I think that, you know, like you said, I mean, maybe that's a question I'll ask it, but. And that is they do range. Right. Every utility is, I mean, quite honestly, I mean, for those who've never gone through this exercise, to say it's arduous is an understatement because essentially some utilities, you know, are well organized. The data, the project list, all the information, the dollars per project is right there. Others, I don't want to say they're written on legal pad, but some of them are completely disorganized and hard to pin down. So I think our team has done an incredible job using, you know, not only people, but other software tools to bring it all together.
And I think the one thing that, the other part that is worth calling out, and I think this is where you're headed, Charlie, and that is, you mention it. So one to 10 years, but every utility is a little bit different. Right. So how does that break out? If you look at, like you said, 777 utilities, how many are just a couple years and how many have 10 year plans?
[00:09:57] Speaker B: Yeah, that's a good question. So about 2/3 of the utilities that we looked at are publishing a one to five year capital budget. Most of them are. Of that, two thirds is one to three years and then the other third is going to be about six to 10 years.
Though a lot of these long term forecasts carry a bit more uncertainty. When you are actually kind of looking at the plan spanned in those latter years, you kind of have to take it with a grain of salt, I think.
Yeah, so like we were saying, we've segmented all this into 35 different categories. It's something we've been doing for four or five years now. And so I think this kind of experiential learning has made the process that much more robust. Along with the help of some very brave interns and great data manager, this process continues to kind of build year over year.
[00:10:54] Speaker A: Yeah, Shout out to Akshay among other people.
But I think you're exactly right. I think so. The near term value of the project data is probably more valuable. But one of the advantages that we do have is we are able to look back four or five years and we can see what projects were in prior years and how they carried through and what does it look like going forward. So. All right, well, let's dig into the details. So that's basically the methodology or sort of our approach.
So what does the spending look like when we look at these 770 utilities in the US and Canada?
What's the dollar spend look like? How does it break out?
[00:11:33] Speaker B: Yes. So for this sample of utilities we're looking at the total plan spend amounts to about $411 billion through 2034. 50% of that is targeting drinking water projects, 42% or so targeting wastewater, and then the remaining going to stormwater.
I think when you look at the year over year spend, you see that spending peaks around 2026 over the next couple of years and then starts to taper off. That's really just a reflection of what we were talking about before. The utility budgets are far less certain once you get past that four or five year mark. It was interesting to see that the average utility budgets jumped about 23% from last year to this year in terms of total cumulative spend. And that's I think in part fueled by inflation tariffs and the federal stimulus finally starting to gain traction at the end of last year. Though we have seen that pretty significant decline in IHA activity this year. That said, I think it's also interesting looking at it on a per capita basis.
So for the current year we saw about $180 per capita allocated for drinking water, $164 per capita for wastewater, and then only 36 for stormwater. But I think it's worth noting that stormwater jurisdictions are a bit more broad. There's also states are allocating transportation, there's commercial and industrial spend that's know targeting stormwater and flooding infrastructure. But for the data we collected, that's kind of how the per capita numbers unfolded.
[00:13:18] Speaker A: Yeah, I think that's a really good point that is worth calling out. And that is stormwater management in contrast to drinking water and wastewater is a little bit different. So stormwater management falls under a number of different authorities. You know, so there are no borders to stormwater. Right. It could be Trent, Department of Transportation, Parks and Rec, the municipal utility itself, or wastewater utility itself. There are a number of different Areas.
So the spending is definitely less. I don't know exact. In contrast to drinking water and wastewater. I think that's. That's a good point. The other is, I know you mentioned that drinking water is about $180. 100, sorry, yeah, 180 per capita for drinking water, 164 for wastewater. But they, too, those numbers have climbed over the past three years. We've looked at this every single year, going three years back.
And just to put it in context, and maybe I just encourage people to go to the presentation to give it a look, but drinking water itself is jumped per capita from 118 to 180 from 2023 to 2025. So that's a pretty big jump. And I think the, like you said, is that partly a reflection of tariffs, inflation, federal stimulus, et cetera, et cetera? Probably a combination of everything.
Let's get more into details. Charlie. So what segments and utilities stand out as sort of what I would say the biggest opportunities or biggest areas of spend may be a better way to put it.
[00:14:54] Speaker B: Yeah, so I think this has been true for the last each year of analysis, but the pipes and network spend are really dominating the overall budgets with about $139 billion, or 45% of the total spend that we tracked targeting those categories, treatment would be next in line at 104 billion of the total.
Then I think it's also interesting, looking at who is accounting for the majority of spend. And what we found is that there's just 20 utilities that account for 41%, or $168 billion of the total cumulative spend for per capita improvements of the sample that we look at. So this doesn't include smaller utilities outside the sample.
But that is maybe unsurprisingly led by New York City, which had a $30 billion plus capital budget, followed by Toronto, Atlanta, Houston, and then I think San Francisco.
So kind of all across the US There's a handful of utilities that are driving this.
And then on the wastewater side, I think it's interesting looking at some of these cities that are really prioritizing or doubling down on wastewater achievement upgrades, where there's, I think about $68 billion in projects for wastewater treatment upgrades, led by Houston, Vancouver, and then Honolulu.
So, you know, once you start getting into the kind of city level or utility level priorities, it's really interesting to compare region to region, city to city, what they're prioritizing.
[00:16:40] Speaker A: All right, so, yeah, I think that's super interesting, like I said, and maybe I don't want to make the assumption all of this data is available to clients. Right. We provide this, you know, project by project or utility by utility. And they're finding a lot of value in this, like you said, across the drinking water, wastewater, stormwater, but then across the categories that we've broken out into 35 subcategories beyond that. So, well, when we look at this, so it's easy to get down in the weeds. And this is where actually, because there's so much data, what are some of the broader takeaways for utilities, vendors, investors? Looking ahead, Charlie, what can we at least glean at a high level from this data?
[00:17:27] Speaker B: So I think first and foremost, the kind of continuing themes that aging infrastructure is dominating the conversation.
Utility capital budgets are overwhelmingly prioritizing distribution and collection networks that are in increasingly desperate need of upgrades and repair.
So I think that would be kind of maybe unsurprising, one of the main takeaways. But we're also, we mentioned this before. Wastewater is, I think, increasingly viewed as a growth engine. Whether that's driven by environment, environmental regulations, or urban expansion or shifting priorities at the utility level, wastewaters continues to be a major opportunity.
Stormwater, we mentioned this before as well, another kind of emerging market. We put out a stormwater market forecast for the US Last year, basically mapping out projected spend through the end of the decade across several different product categories and areas.
And within our own data set or the CIP data set, this amounts to about $31 billion in stormwater spend that's tied to climate resilience projects, flooding and other types of stormwater infrastructure and management.
Another I think point that I would highlight here is the planning uncertainty of all of this.
As we were talking about before, most utilities really only have kind of a clearer picture of what, one to five or so years in the future.
And so longer term capital planning continues to be a challenge amid all of the funding uncertainty and shifting regulatory landscape under the new administration.
These are all things that we're tracking in the US And Canada, Municipal Water Service and other areas at Bluefield.
So definitely get in touch if you're interested in the policy factors and implications.
Overall, though, just to take a step back, I think the bottom line is that the companies that we work with, if you're engaging early with cips, that gives you visibility. It can help strengthen customer relationships and even shape procurement. So this is a data set that continues to grow year over year and improve, and we definitely encourage folks to check out those. The presentation, I think it illustrates a lot of this better than I could probably Articulate it in an audio format. But a lot of interesting takeaways from across these utilities.
[00:20:01] Speaker A: Yeah, no, I agree. I think your last point is a really good one. I think it's super interesting. Like I said, you can download the presentation, but for clients particularly, we're more than happy to jump on calls and sort of talk through what we're seeing. There are troves of really valuable data also, just to pinpoint. I know every utility, like I said, is a little bit different, but we can search through some of the projects and identify things like, you know, digital spend or spend on reuse or their specific areas, whether it be this year, next year, or going forward. So, yeah, no, I think what Charlie, you and the team have done in pulling this together year over year is. Is impressive. And I, you know, I also would give a shout out to the clients themselves. There are several clients in particular who've been heavily involved in this process and helping us build it out, but also just designing what the output looks like. So shout out to them. You know who you are.
Well, with that being said, Charlie, thanks for breaking this down. But before I let you go, what else do you have on your research agenda over the next month or two?
[00:21:11] Speaker B: Yeah, a lot of exciting stuff in the works. We're updating our trenchless forecast. We've got a updated reuse report in the works as well. And then a few of us will be heading to weftech here in Chicago. Thankfully, I don't have to get on a plane for that, so looking forward to catching up with folks then.
[00:21:32] Speaker A: Awesome. All right, well, yeah, I look forward to the trenchless forecast. And like, at the start of this, I had mentioned weftech and that, you know, a group of us were going to be there. So, yeah, that's the. That'll be the big show of the month. And actually this year it's in September as opposed to October. I think it stretches over in October. So if you want to meet up with Charlie about this or other things in municipal water, you can always go to water expertsluefieldresearch.com Send an email, and we'll set up a meeting. So. All right, Charlie, I'll let you off the hook. I've got some travel ahead of me today, and it sounds like I need to go answer a telephone call as well. So thanks again for jumping on, and we'll catch up soon.
[00:22:14] Speaker B: Thanks, Reece. Take care.
[00:22:17] Speaker A: All right, so that was awesome having Charlie on. So appreciate him doing that. I know he's glad to get past this project. And on to others.
What I do like about the CIP analysis, that it does give us some visibility into where the market is going. I know there's a lag because I think Charlie alluded to this, that utilities are, they're in the same uncertain environment as everybody else. And Putting together their CIPs, their plans take an extraordinary effort on their part figuring out how, what they're going to prioritize, where they're going to spend, what the cost is going to be.
And over the past 12 to 18 months, not longer. Let's go back even five years if you include inflation, post Covid and such, there's been so much uncertainty. They're trying to figure out, you know, how much should they allocate or budget for certain types of projects, which ones are going to need to be deferred or not.
And they're on a time schedule as well.
But I think one case in point is that I think Charlie had said something to the effect of pipeline spending was about pipe and Networks was about 45% of spend that more or less aligns with what Bluefield Research's capital expenditure forecast is, which is a different exercise for us. So there's the capital improvement plans. We use that information to help inform, give some insight into what the drivers, where the spend is going for our capital expenditure forecast. But they are, they're not directly linked for those using both of them on our end. But you know, I think these capital improvement plans, they're more than just documents. They are, like I said, they're signals about the future of water infrastructure in North America and where it's going. So that being said, if you have questions about it, you can always reach out to bluefieldresearch.com you can learn more about it. You can download the presentation. You can also go to water expertsluefieldresearch.com and ask any questions you may or may not have about this data as well as trench list, which is what Charlie mentioned and other research that we have going on. So with that being said, thank you for being part of the journey and what's turning out to still be an interesting 2025. Before I sign off, I don't say this enough, I want to thank all the people involved in making this and all other conversations happen. That includes Mike Gaylor, Ryan Sullivan, Kelly Talbot, Steph Aldock, in this case Charlie Seuss and all the other Bluefield Research analysts. I'd be talking to myself like I did last time in episode 126 if it weren't for them. If you're in Boston, Barcelona, New York, Chicago, San Francisco, Paris, let us know and we'd enjoy the opportunity for a meeting, because that's where Bluefield Research is.
Send us a
[email protected] with any topic ideas you'd like us to discuss. And lastly, tell a friend about it, because as I always say, I like friends. I am Reece Tisdall and I'll catch you next time as we keep watching the Water Sector one signal at a time. This podcast and these water industry insights have been brought to you by the one and only Bluefield Research. To learn more about us, bluefieldresearch.com visit us till we talk again. Be well, be safe, and take care of.
