In today’s increasingly complex water landscape, investors and operators face a range of challenges that threaten to redirect—or, in some cases, even obstruct—strong currents of capital. Water scarcity is the sector’s primary concern, with 88 percent of the respondents identifying it as important or very important. This existential challenge is compounded by the perceived high costs of the technological innovation needed to address it, with 81 percent of respondents indicating that costs were an important or very important challenge. Some leaders argue that a narrow focus on upfront technology costs obscures the broader value calculation. 

“In terms of costs, we don’t have a technology problem, we have a ‘value of water’ problem,” says Devesh Sharma, CEO at Aquatech International. “People will say that technology is expensive, but what’s the alternative? Against what is the cost being measured? The costs of inaction will be much higher. The technology is out there and it can always improve. What’s more important is whether the business model, financial model and regulatory environment are positioned to support,” explains Sharma.

View full image: Preferred investment structures by organization type (%) (PDF)

The importance of the regulatory environment was underscored in other findings. Survey analysis shows that uncertainty is one of the most significant operational obstacles for organizations in the water sector, with just over one in three highlighting volatile business environments (including regulatory uncertainty or geopolitical risk) as their primary challenge. The data reveals that 24 percent of the respondents identify changing regulatory frameworks as their biggest challenge, while separately, 42 percent anticipate policy shifts and 33 percent expect tightening regulations in 2025. This uncertainty is likely to create a ripple effect through investment decisions, extend timelines and complicate financial projections. President Trump’s tariff announcements are very likely predictive of the nature of the regulatory environment in which organizations in the water sector will operate in the short to medium term. Only time will tell what impact the recent tariff announcements will have on an already sensitized sector. 

“Regulatory uncertainty extends project development cycles and increases costs, making it one of the biggest challenges across all types of water projects,” says Lihy Teuerstein, CEO, IDE Water Assets. “Regionalized water management approaches could transform how we address this uncertainty. By scaling beyond fragmented local jurisdictions, we can distribute costs, build redundancy between water sources and create a portfolio perspective that allocates different water qualities to their optimal uses – but this requires overcoming entrenched local politics and finding decision-makers willing to champion a more holistic vision.”

View full image: Biggest challenge for organizations for water activities in the next 12 months (%) (PDF)

Regional variations reveal distinct patterns that may inform and direct targeted jurisdiction-specific strategies to address perceived challenges. Looking at the key challenges identified by region, respondents in Latin America, Southern Europe and Oceania cite insufficient funding as a top challenge while respondents in Central, Eastern and Southern Europe identify a lack of reliable investment data and slow returns on investment as a challenge.

View full image: Biggest challenge for organizations for water activities in the next 12 months by region (Top 3) (%) (PDF)

For financial stakeholders, the challenges are even more acute. Infrastructure and pension funds cite scarcity of suitable investment opportunities, while private equity respondents identified extended timelines and uncertain returns. Meanwhile, water utilities and operators remain caught between increasing compliance requirements and insufficient funding to meet them.

View full image: Top three ways government involvement will shape the water sector (%) (PDF)

The geopolitical environment adds another layer of complexity, with 13 percent of respondents citing it as their primary challenge. Organizations must now navigate not only local regulatory environments but also contend with supply chain disruptions, trade tensions and climate-related regulations that vary across the different regions. Despite these challenges, there remains a strong expectation (44 percent) that governments will increase financing options through public-private partnerships, suggesting that there are mechanisms being developed to help address these challenges. Organizations that can develop strategies to manage regulatory uncertainty and address the fundamental challenges of water scarcity will be in the best position to capitalize on the opportunities that lie ahead.

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