A new analysis from Carnegie Mellon University reveals a significant disconnect between the physical risks facing U.S. water infrastructure and the financial planning intended to support it.
By creating the first "Drinking Water Utilities Climate Risk Index," researchers assessed over 1,400 utilities and found that systems serving 67 million Americans are at "high risk" for climate disruptions like drought, flooding and extreme heat. Despite this exposure, 36% of the municipal bonds issued by these high-risk utilities — representing $9.2 billion in debt — fail to mention climate change in their financial disclosures.
For the trades, this gap signals potential volatility in project funding and infrastructure reliability. The study highlights regional disparities: while the Western U.S. battles heat and water scarcity, the Northeast and Midwest contain 70% of the nation’s most vulnerable systems, largely due to a combination of climate hazards and aging, outdated infrastructure. The researchers identified specific states — including Texas, California, Illinois, Michigan, Massachusetts and Virginia — where utilities hold over $500 million in debt while remaining extremely susceptible to environmental shocks.
The burden of these risks falls disproportionately on smaller communities. The data shows that high-risk utilities serve an average of 52,000 customers, compared to 139,000 for low-risk systems, suggesting that smaller towns with fewer resources for maintenance and upgrades are the most exposed. The research team aims for this index to guide the distribution of Bipartisan Infrastructure Law funding, ensuring capital is directed toward the resilience projects and retrofits necessary to protect public health and financial stability over the next two decades.
