Texas Water Policy Primer


Water is the world’s most precious resource — crucial for human survival, food production, energy generation, and economic prosperity. However, it is also a finite resource that varies widely by location. Because of our interconnected water systems, any individual action can have a large impact on us all. For these reasons, the government must thoughtfully manage water and maintain infrastructure for the benefit of all Texans — now and in the future. 

Water Governance 101

The Texas water system is a sprawling series of regional networks responsible for providing safe and accessible drinking water, managing wastewater, and supplying water to agriculture, energy, and other industry users. 

Generally speaking, surface water is owned and permitted by the state of Texas. Groundwater, on the other hand, is considered a private property and owned as a mineral estate by landowners. Both surface and groundwater make up Texas water supply and are connected through the water cycle.

Most people get their water for everyday use through a local water and sewer utility, which may be publically owned (municipal or other political subdivision), investor-owned, or non-profit. Some individuals in rural, unincorporated areas rely on private groundwater wells and septic tank systems for water and wastewater management. Residents of colonias may lack access to water services altogether.

Because of the state’s differing demographics, water supply, infrastructure, climate, and local industry, water infrastructure projects are often implemented by local sponsors, such as special purpose water districts, municipal utilities, or local private utilities. 

Both the federal government and states work to regulate water and fund water infrastructure. Various state agencies are involved, but the three primary ones are:

  • Texas Commission on Environmental Quality (TCEQ) — maintains federal water quality standards established by the Clean Water Act and Safe Drinking Water Act, ensures water availability for retail use, and oversees water districts and local governmental bodies that manage local water needs;
  • Texas Water Development Board (TWDB) — assists with state water planning, water infrastructure financing, and water data; and 
  • Public Utilities Commission (PUC) — regulates water and wastewater rates. 

Bottom line: Access to water is a multilevel partnership that looks different depending on the area. While most water infrastructure projects are implemented locally, the state is responsible for: ensuring water quality standards for public health and safety; managing the entire state’s water resources to meet present and future demands; and helping finance water projects. 

Texas-Sized Water Challenges

A Demand and Supply Issue

With Texas’s population expected to grow from 30 million to 52 million by 2070, the state faces significant water demand and supply challenges,.

The Texas Water Development Board’s State Water Plan (SWP) is the state’s primary tool for addressing future water needs. Updated every five years, the SWP projects water supply and demand over a 50-year horizon and recommends strategies to mitigate shortages.

The latest SWP, released in 2022, forecasts a water shortage in Texas in the event of another record drought by 2070 if no new water strategies are implemented. 

The SWP defines water supply as the amount of physically and legally available water during a record drought. Texas’ existing water supply is projected to decrease by 18% by 2070, primarily due to aquifer depletion and minor losses in reservoir yield from sedimentation (the deposition of rocks and other materials in bodies of water).

Simultaneously, water demand is expected to rise by 9% by 2070, driven mainly by population growth concentrated around the state’s major metropolitan areas, especially Austin, Dallas-Fort Worth, Houston, San Antonio, and the Rio Grande Valley. Concurrently, municipal water use is projected to increase by 63%, surpassing irrigation demand as the largest water use sector. Irrigation demand is expected to decrease by 20% over the planning period. Livestock water demand is anticipated to grow by 15%. Demand for manufacturing and steam-electric power generation is expected to remain stable. Water demand for mining, including oil and gas operations, is projected to rise until 2030 and decrease by about 30% by 2070.

Aging and Deteriorating Water Infrastructure

Aging infrastructure impacts both water efficiency and quality. Much of the nation’s water infrastructure was built in the 1970s and 1980s with substantial federal investment. Now, it urgently needs replacement or upgrading. Texas’ drinking water and wastewater infrastructure scored a C- (mediocre, requires attention) and a D (poor, at risk) on the American Society of Civil Engineers’ 2021 Infrastructure Report Card.

Water infrastructure includes systems for treating and distributing drinking water and wastewater, such as pipes, pumps, treatment facilities, and sewer lines. Leaky pipes result in significant water wastage, with more than 30 billion gallons lost in Texas in 2021 alone, primarily in the East Texas Water districts (TWDB’s Water Loss Audits Summary Report, 2021). Corroded lead pipes pose health risks by potentially contaminating water supply. Texas ranks fifth in the nation for lead pipes, with 7% of its pipes being lead-based. Other water quality issues can arise from inadequate water treatment, causing untreated wastewater to contaminate lakes and rivers. 

The resilience of our water systems is also a concern amidst extreme weather. Extreme heat and drought cause soil to expand and contract, adding pressure to already deteriorating pipes. Flooding and winter storms can also wear pipes, resulting in potential contamination. 

One indicator of deteriorating water systems is boil water notices, which numbered 3,143 across Texas in 2022, up from 1,993 in 2018. Emerging contaminants like PFAS further highlight the need for well-maintained and updated water treatment systems to ensure safe drinking water.

Fragile Natural Infrastructure

In addition to issues with built infrastructure, such as pipes and other human-made systems, Texas’s natural infrastructure is fragile and increasingly stressed. Texas is already drought-prone, and impacts of climate change — such as extreme heat, more frequent droughts, and floods — exacerbate the strain on natural resources.

The average number of 100-degree days in Texas has tripled since the 1970s. As of 2023, about 76% of Texas was experiencing some stage of moderate to exceptional drought. Extreme heat accelerates evaporation, contributing to the depletion of surface water in rivers and reservoirs. For example, Falcon Reservoir, which supplies water to the Rio Grande Valley downstream from Laredo, was barely 10% full in May 2024. 

During extreme rainfall events, dry soil struggles to absorb water, resulting in increased surface runoff flowing into streams and rivers, ultimately reducing the volume of water these bodies can store over time. Dry soil also contributes to flash flooding. 

Shortage of Human Infrastructure

A report by the Texas Water Foundation highlights significant workforce challenges within Texas’ water infrastructure sector, including an aging workforce near retirement, a shortage of qualified personnel, attracting and retaining personnel, and non-competitive wages. 

The state’s ability to effectively manage and supply water hinges on securing qualified personnel to operate those water systems. 

Undervaluing Water

Some water experts argue that undervaluing water contributes to water scarcity. Generally speaking, the actual value of water in the U.S. exceeds its current price. When prices are low, consumers end up using more than necessary. Additionally, cash-strapped utilities might defer necessary maintenance and upgrades, leading to deteriorating infrastructure and higher costs in the long run.

Historically, water has been priced low relative to other utilities, and many providers continue to follow this precedent, even as the costs of maintenance and upgrades have increased. Government subsidies or other funding allows utilities to charge less for water than its actual cost. Additionally, because water is a human need, there is significant political and public pressure for utilities to keep water rates low to ensure affordability for all segments of the population.

While keeping water affordable is important, undercharging can lead to insufficient revenue for necessary investments in infrastructure, maintenance, and workforce development, ultimately risking water quality and service reliability. 

Opportunities to Strengthen Water Security

The 2022 SWP recommends numerous water management strategies and infrastructure projects to meet projected demand, mainly by reducing water demand or providing additional water supply. Some of these strategies are discussed below.

Although the SWP recommends these strategies, local sponsors are ultimately responsible for their financing and implementation. Some projects may face political challenges, high costs, or require rate or tax increases. 

A combination of strategies is needed to increase water security due to the state’s variability in population, industry demand, water supply, infrastructure, and climate.  

Demand Management

Conservation is an essential part of the 2022 SWP. It includes activities that reduce water consumption or increase water use efficiency, allowing more to be done with the same amount of water. 

Conservation efforts represent 30% of the water management strategy supplies in 2070 — with 16% coming from agricultural irrigation, 13% from municipal use, and 1% from mining, manufacturing, and power generation use. Because agriculture is currently the largest water user in Texas, irrigation conservation is the state’s best opportunity to achieve significant water savings. Irrigation conservation involves altering methods, equipment, and crop choices. 

Municipal conservation strategies may include offering rebates for water-efficient plumbing fixtures or a radio campaign on water conservation, among others. Drought management, temporarily restricting certain activities such as car washing during a drought, is another recommended strategy to decrease demand. 

Utilities, vested in ensuring water availability for their customers, can also promote conservation through effective rate structures. For example, instead of a fixed fee, they can implement increasing block rates, where customers are charged progressively higher rates for increasing water usage.

Overall, conservation strategies tend to be an aggregate of multiple best management practices and are generally less expensive than developing new water infrastructure. 

Providing additional water supply

The SWP recommends various water supply strategies and projects, including:

  • Expanding infrastructure to enhance existing water supplies, such as building pipelines, pump stations, and increasing water treatment capacity.
  • Constructing new reservoirs and groundwater wells.
  • Utilizing reuse water for both potable and non-potable purposes, such as landscape irrigation and industrial processes.
  • Implementing other methods like weather modification and rainwater harvesting.

In addition to the abovementioned strategies, aquifer storage and recovery, desalination, and produced water have garnered significant attention as “innovative” technologies in the newly established New Water Supply for Texas Fund (SB 28, 88R). 

However, are these technologies the ultimate solution to our water shortage? The short answer is no. By 2070, desalination and aquifer storage and recovery are expected to contribute only a small percentage of new water supplies. Produced water projects are not even included in the State Water Plan due to health concerns and costs. Effective water management relies on a combination of practices rather than a single solution.

Aquifer Storage and Recovery

Aquifer storage and recovery (ASR) is a safe and well-established technology to address water supply issues.

ASR involves pumping treated water underground to store it for later use. Traditionally, Texas has relied on above-surface reservoirs to capture and store water for dry periods. However, rising temperatures have increased evaporative water loss, depleting supplies. Although ASR has some upfront costs, it is considered less expensive relative to reservoirs in the long run because it prevents water loss from evaporation and requires less land. ASR is also one of the more environmentally friendly forms of new water supply.

The success and feasibility of ASR depend heavily on the region, as the location and material of the aquifer are crucial factors. ASR activities in Texas began in the 1940s, and the state currently has three facilities in El Paso, Kerrville, and San Antonio. The 2022 SWP includes 27 recommended projects to establish ASR systems or pilot projects. These projects could provide about 2.5% of new water supplies in 2070.


Desalination is a safe and long-tested method for increasing water supply, but it is also expensive.

Desalination involves filtering salt and other minerals from seawater or brackish water to produce potable drinking water. Seawater desalination typically draws from coastal bays and estuaries, while brackish water desalination sources from underground aquifers and occasionally from salty rivers. Brackish water has a salinity level between that of seawater and freshwater.

Desalination costs vary based on the water volume and salinity level, but the process is generally expensive due to the energy required, the expense of cleaning membranes, and the need for proper brine disposal.

Transporting desalinated water to areas with water scarcity can be also costly and energy-intensive, especially if pipelines need to be built or water needs to be pumped uphill. Nevertheless, seawater desalination in coastal areas can help alleviate water shortages in other regions.

Desalinating brackish water offers a more promising outlook. It is less energy-intensive than seawater desalination because it has lower salinity. Additionally, brackish water is already inland, reducing transportation costs. Combining multiple water sources with desalinated brackish water can further increase water supplies. The cost to produce one acre-foot of desalinated water from brackish groundwater ranges from approximately $357 to $782, compared to $800 to $1,400 for seawater desalination.

It’s important to note that desalination can pose environmental risks, including harm to aquatic life, disruption of coastal salinity balance, and potential over-extraction of groundwater. Desalination also produces a byproduct called brine that must be disposed of properly to avoid water quality issues.

Texas currently has 52 municipal desalination facilities using brackish water, the largest of which is in El Paso. However, the facility only contributes a small percentage of the city’s overall water supply. There are no seawater desalination facilities in Texas.

The 2022 SWP estimates that about 5% of recommended water supplies will come from desalination projects, mostly due to economic constraints. 

What about Produced Water?

Produced water, a byproduct of oil and gas extraction, is not included in the SWP as a strategy for increasing water supply. However, this topic has gained significant attention from members with oil and gas companies in their districts, who are advocating for ways to further profit from this byproduct.

Produced water is generally not safe for potable use without significant treatment due to contaminants such as heavy metals, Naturally Occurring Radioactive Materials (NORMs), and various chemicals. The specific substances in produced water vary widely depending on the location.

Currently, there is not enough data to determine the safety of produced water for non-oil and gas sector use. Even with adequate treatment technology, the process is often prohibitively expensive.

Treating produced water for use outside the oil and gas industry is not currently more economical than its disposal or reuse within the industry. According to a 2012 report by the Groundwater Protection Council, 99% of produced water in Texas is disposed of or used for enhanced oil recovery. Disposal occurs primarily through injection into EPA Class II wells. If not properly plugged or planned for, these wells can become orphan wells, posing environmental and safety risks, especially in areas like West Texas

While treating produced water to potable standards is likely technically feasible, it is not cost-effective. Because of the high level of contaminants, the best approach to treating produced water will likely be a combination of several energy-intensive technologies. 

Perhaps most importantly, more testing and analysis are crucial to determine if technology can treat produced water to a level that poses minimal risk to human health. A 2022 report by the Texas Produced Water Consortium (TXWPC) highlights that although there has been preliminary testing on the effects of produced water in construction materials, irrigation, and livestock, more data is needed.

The state should avoid over-relying on untested methods like produced water, especially when safer and more economically viable alternatives are available.

Improving Water and Wastewater Regulation for Small Utilities

In 2014, the Public Utilities Commission (PUC) began regulating water and wastewater rates for investor-owned, nonprofit, district, and some city utilities. However, the regulatory process, designed for larger electricity and telecommunication utilities, has posed significant challenges for smaller water and sewer providers. Maintaining and updating infrastructure often necessitates rate increases, which can seem substantial to smaller providers’ customers due to their smaller customer base.

Customers have the option to appeal their rate increases to the PUC. However, smaller municipal utilities, water districts, and nonprofits often lack the resources to contest these case hearings effectively. In some instances, an additional surcharge to cover legal fees exceeds the original rate increase, diverting funds from water infrastructure to legal expenses. This situation leaves both ratepayers and utilities dissatisfied.

To address this issue, smaller utilities have proposed an alternative administrative process to replace long, costly court hearings. This process would be more accessible and cost-effective for smaller providers and ensure a fair and efficient resolution of rate disputes.

Separate from this issue is the continued lack of basic infrastructure, including water services, in colonias. Currently, the state’s Economically Distressed Areas Program (EDAP) provides financial assistance for areas where water or sewer systems do not exist or do not meet minimum state standards, including colonias. Continued funding for colonia infrastructure is crucial to assist the thousands of communities who still do not have access to water services.

Water Funding 

Water infrastructure funding comes from a mix of public funding and private utility ratepayers. Although local entities like water districts, municipal utilities, or private utilities are responsible for implementing water management strategies to meet demand, federal and state governments also play crucial roles in financing water projects.

The Infrastructure Investment and Jobs Act (IIJA), signed by President Biden in November 2021, allocates $55 billion to upgrade America’s water infrastructure, addressing decades of underinvestment. Texas expects to receive approximately $2.5 billion through the IIJA over the next five years. Some funds have already been committed to projects.

In November 2023, Texas voters approved the creation of the Texas Water Fund and a $1 billion infusion to bolster existing water financing programs administered by the Texas Water Development Board (TWDB). These programs include federal and state grants, low-interest loans, and deferred loans for water projects and infrastructure. SB 28 by Sen. Perry requires that 25% of the Texas Water Fund be allocated to the newly created New Water Supply for Texas Fund to explore new water sources, including aquifer storage and recovery, desalination, and produced water.

However, more investment is needed. The 2022 SWP estimates that implementing its over 2,400 water management strategy projects will require $80 billion over the next 50 years. Of that, $47 billion (or 59%) would be needed in the form of state financial assistance. The remaining $33 billion would likely be paid by ratepayers in cities or water districts.

Additionally, the most recent U.S. Environmental Protection Agency assessments estimate that it will cost Texas $61 billion for water system upgrades and $19 billion for wastewater system improvements over the next two decades. These figures are expected to increase with inflation. 

However, the cost of inaction is also substantial. If the recommended water management strategies are not implemented and another record drought, or worse, occurs, the population will face water shortages and economic losses. The State Water Plan (SWP) estimates that by 2070, job losses could reach 1.4 million, and Texas businesses and workers could lose $153 billion annually. Without action, approximately four out of five Texans would experience at least a 10% water shortage in their cities and residences by 2070, and about a quarter of all municipal water users in Texas would have less than half of the water they need for daily life and work. These estimates do not even include the economic losses associated with drought-related crop damages, which could total $43 billion.

While increasing awareness of water costs and potential rate adjustments is important, the state can help alleviate financial burdens on ratepayers to meet water goals and improve infrastructure. Whether through dedicated revenue sources or one-time infusions, state investments are crucial now.


The government’s ability to supply and manage water is crucial for human survival, food production, energy generation, and economic prosperity. 

Our Texas water systems are under stress by growing populations, aging infrastructure, extreme weather patterns, and chronic underinvestment. If we don’t act, Texas water demand will outpace supply in the next 50 years, with human health, crop yields, and commerce at stake.

Texas must empower local governments and utilities to best manage the water supply, reverse chronic underinvestment in water infrastructure, and work to educate Texans on the price of water.