Water reuse — the recycling of treated wastewater for beneficial applications — is emerging as a critical solution for U.S. utilities, municipalities, and industries seeking resilient water supply strategies.

According to Bluefield Research’s new Insight Report: U.S. Municipal Water Reuse – Market Trends and Forecasts, 2025–2035, capital expenditure on municipal reuse infrastructure is projected to reach US$47.1 billion between 2025 and 2035. The largest share of this investment will go towards advanced treatment technologies (42.3%), followed by conveyance networks (40.4%) and engineering and design (12.4%).

More than 600 projects are currently in planning or execution, driven by evolving state policies, shifting water demands, and technological advancements.

Potable reuse projects are expected to represent 37% of new reuse capacity by 2035, with associated capital expenditure exceeding US$19.9 billion. States such as Colorado, California, Florida, and Arizona have already enacted regulations supporting direct potable reuse (DPR), while New Mexico, Utah, Kansas, and Nevada are exploring pilot programmes and new guidelines.

Megan Bondar, analyst at Bluefield Research, noted: “While irrigation applications make up the foundational use for water reuse, large potable reuse projects such as the Groundwater Replenishment System in Orange County and the SWIFT project in Virginia are showcasing a change in receptiveness among municipal decision makers.”

California’s reuse capacity is expected to surpass Florida’s within the next decade, accounting for 41% of national additions. Colorado, Texas, and Florida will collectively contribute 45%, driven by population growth and groundwater depletion.

“The Midwest and several East Coast states, including Virginia, New York, and New Jersey, are also adopting reuse,” said Bondar. “While Western projects are largely driven by drought resilience, Eastern initiatives tend to focus on improving water quality and reducing saltwater intrusion.”

Industrial demand is emerging as a key driver, particularly in high-stress regions such as New Mexico, Arizona, and Nevada. Data centre operators are becoming significant participants in municipal reuse partnerships — for example, Loudoun Water in Virginia supplies more than 800 million gallons of reclaimed water annually through a dedicated 20-mile network to support data centres.

“On paper, it makes strategic sense for industrial facilities to source treated water directly from wastewater utilities — treated water that would otherwise be discharged into rivers or other surface waters,” said Bondar. “That said, execution is often complex, with multi-stakeholder coordination creating hurdles to project completion.”

As policy, technology, and industrial demand align, water reuse is expected to move from the margins to the mainstream, defining the next chapter of sustainable water management in the U.S.