Skip to main content

The Need for an Advanced Research Project Agency for Water

The Brief

Executive Summary

  • High risks, prohibitive costs, regulations, and sector fragmentation are longstanding barriers to the development and adoption of new technologies and innovations in the water sector.
  • Replicating the successes of federal R&D programs that support energy innovation and enhance national security—ARPA-E and DARPA—in a new water-related program would help overcome some of these challenges and lead to crucial advancements in water technology innovation, distribution, and adoption.
  • This blog explores how such a program would need to be tailored to address unique challenges in the water sector.

Barriers to Water Innovation

Broadly speaking, new technologies, processes, and innovations can lead to greater efficiencies and higher productivity. With years of underinvestment, deferred maintenance, and—too often—mismanagement, the water sector has struggled to maintain the status quo, let alone innovate. BPC’s Water Task Force previously explored why America’s fragmented and deteriorating water infrastructure is in desperate need of innovation and identified four key barriers.

High Risks

The water industry is known to be risk-averse for evident reasons. Drinking water and wastewater systems must protect the environment and public health. The consequences are severe and even deadly if a new technology or process doesn’t work, leaving little flexibility to test, pilot, or innovate. Because of the stakes involved, the water sector is known for its slow adoption of new technologies.


The Safe Drinking Water Act authorizes the Environmental Protection Agency to set national health-based standards for drinking water to protect against contaminants that may be found in drinking water. EPA, states, and drinking water systems then work together to make sure that these standards are met. In regard to wastewater and stormwater, the Clean Water Act established the basic structure for regulating discharges of pollutants into the waters of the United States and regulating quality standards. Violations of either law can result in costly penalties or lawsuits from state environmental protection agencies or EPA. As such, water systems and utilities are hesitant to try new approaches unless they are confident, they will remain in compliance with their obligations under the Safe Drinking Water Act and Clean Water Act.

However, some level of risk is inherent in testing and adopting new innovations. Yet the current regulatory environment has created a lengthy and complicated process for entrepreneurs and innovators looking to bring new products to market, in addition the challenges water systems and utilities face in adopting innovative solutions.

Prohibitive Costs

Despite the potential of innovations and new technologies to help lower costs and make systems more efficient, such investments require significant upfront funding. Most water systems are already struggling to find the money needed to address aging infrastructure, changing customer bases, regulatory compliance, and climate change vulnerabilities.

Water utilities have been forced to raise historically underpriced customer rates, which in turn has made their services increasingly unaffordable for the lowest income households. From 2000 to 2017, water and wastewater prices increased by 136%, with average annual increases of over 5%, far outpacing rising income and inflation. One study found that if water rates rise at projected amounts over the next five years, the percentage of U.S. households who will find water bills unaffordable could triple from 11.9% to 35.6%.1

With most utilities currently unable to meet existing needs and growing concern about the affordability of water and sewer services, funding research and development of water innovations that may not ultimately be fruitful or making the investments needed to adopt innovations already on the market are both difficult problems to overcome.

Sector Fragmentation

In the United States, there are 7,450 stormwater systems, more than 16,000 publicly owned wastewater treatment systems, and more than 50,300 community water systems. Water systems are managed differently, serve different populations, and have different challenges in meeting water quality standards. Thus, achieving widespread adoption of any single innovation in the water sector is not only a monumental task but an impossible one. All innovations must be tailored for each utility. Moreover, smaller systems often struggle to meet their existing obligations and do not have the staff, capacity, or expertise to pursue funding or financing opportunities to adopt technological improvements.

Read Next

Learning from Other Federal R&D Programs

When faced with similar challenges in the defense and energy sectors, the federal government created the Defense Advanced Research Projects Agency, or DARPA, and the Advanced Research Projects Agency-Energy, or ARPA-E, little-known agencies that have made an incredible impact. DARPA has been credited with the creation of the internet, voice recognition, and GPS devices. And after only a decade, ARPA-E has supported projects that have lowered energy costs and improved energy security, attracting $2.9 billion in private-sector funding that has helped create 76 new companies. Understanding how these programs have worked is key to implementing a similar effort that can overcome longstanding barriers to innovation in the water sector.

Defense Advanced Research Projects Agency

In 1958, Congress established DARPA to support investments in breakthrough technologies that would enhance our national security. DARPA is credited for developing some of the most life-altering technologies of the 20th century—precision weaponry, voice recognition, the internet, GPS devices, and virtual reality. DARPA has pushed the frontiers of U.S. innovation broadly by creating an ecosystem that includes academic, corporate, and governmental partners, with a common goal of producing revolutionary technologies for national security in unconventional ways.

Situated within the Department of Defense, DARPA consists of six technical offices with 100 program managers who together oversee 250 research and development programs. Program managers come from a wide range of disciplines and are generally contracted for three to five years. All program managers have a technical staff that is also supported by experts in security, legal, and contracting issues; finance; human resources; and communications.

DARPA was established to be explicitly separate from other military R&D programs. This ensures that technology efforts are not tied to formal requirements, specific roles, or timely military missions. This also allows DARPA to explore new and unconventional concepts without affecting current military services needs.

It is important to emphasize that DARPA does not directly perform R&D but instead supports R&D through contracts with various entities, including universities, nonprofits, industry and Federally Funded Research and Development Centers.2

In fiscal year 2019, Congress appropriated $3.5 billion DARPA, nearly a 10% increase from fiscal year 2017.3 Much of DARPA’s effectiveness, success, and continued congressional support have been attributed to its:

  1. Focus on dynamic, not incremental, innovation;
  2. Capacity to foster collaboration and coordination between academic, corporate, and government entities; and
  3. Recruitment of top-tier innovators as program managers.

Advanced Research Project Agency-Energy

Congress passed, and President George W. Bush signed into law, the America COMPETES Act in 2007, which authorized ARPA-E’s creation, modeled after DARPA with an aim to  advance clean and affordable energy R&D and innovation. Situated within the Department of Energy, ARPA-E received its first appropriation of $400 million in 2009, funding the program’s first projects. Its creation is, in part, credited to a report from the National Academies, warning policymakers that the United States was falling behind in clean energy R&D compared to other countries. The report explicitly mentioned DARPA as a successful model to create high-quality jobs and focus on new science and technology efforts.

Since 2009, ARPA-E has provided about $2 billion in R&D funding for more than 800 potentially transformational energy technology projects.4 ARPA-E keeps track of its projects with “impact sheets.” Impact sheets analyze and catalog some of the agency’s most successful projects. They also help keep track of the early indicators of success and allow the agency to consider incorporating private sector or government agency partners with the ability to help a project with funding, testing, publication, inventions, and patents. Importantly, one key factor in ARPA-E’s success is that it closely evaluates the progress of each project and reallocates resources to projects not meeting necessary metrics and benchmarks.

In March 2019, ARPA-E announced that many of its project teams have continued to advance their technologies: 76 new companies have been formed, 131 have partnered with another government agency, and 145 teams have together raised more than $2.9 billion in private sector funding to continue to advance their technologies to market.5

ARPA-E projects have also helped advance scientific understanding and technological innovation as evidenced by 2,489 peer-reviewed journal articles and 346 patents. These indicators demonstrate that ARPA-E’s approach to selecting, funding, and actively managing early-stage energy R&D continues to pay off, advancing state of the art technologies in energy, science, and engineering, and defining new opportunities for the commercialization of advanced energy technologies.

What an ARPA-W Would Look Like

The creation of an Advanced Research Project Agency for Water, or ARPA-W, would go a long way to addressing the four barriers to water innovation. ARPA-W would define high-risk, high-reward R&D needs, solicit proposals from public and private enterprises that have solutions at various stages of commercialization, and manage information flow about the research for the benefits of the water sector industry and overall environmental and public health. The Water Resources Development Act could be the legislative vehicle that establishes the agency and is due for reauthorization in 2020. The purpose of WRDA is to authorize major programs and projects that are critical to improving the various aspects of this nation’s water-related resources.

As noted previously, individual water utilities do not have the capacity, regulatory freedom, or financial resources to engage in technology development. ARPA-W would create a formal risk-sharing and collaborative environment by bringing together water agencies, universities, research facilities, and the private sector/tech industry.

An ARPA-W program would centralize federal R&D, breaking down silos between the various federal water agencies, including EPA, Army Corps of Engineers, and the Department of Agriculture. ARPA-W could also be oriented to absorb or alleviate some of the regulatory risks associated with the testing new technologies.

Encouraging public-private partnerships would additionally help to alleviate budget pressures—allowing the public sector to focus on their responsibilities and creating an environment where innovations could lead to new companies and investments. ARPA-W could solve critical gaps in water innovation, but it should be accompanied by a mechanism to educate the thousands of water utilities about new approaches and some kind of test-bed to ensure new technologies comply with all regulatory requirements.


To be innovative, one has to accept the risk of failure. This is true for any sector but also recognized as much more difficult for the water sector. Establishing regionally focused and diligent experiments will foster the conditions for innovation while protecting the public.

End Notes

1 Elizabeth Mack and Sarah Wrase, “A Burgeoning Crisis? A Nationwide Assessment of the Geography of Water Affordability in the United States,” January 2017. Available at: Marcy E. Gallo, Congressional Research Service, “Defense Advanced Research Projects Agency: Overview and Issues for Congress,” November 2018. Available at:
2 Department of Defense, Financial Management Regulation (DoD 7000.14-R), Volume 2B, March 2016
3 Defense Advanced Research Projects Agency, “Budget,”2019. Available at:
4 Advanced Research Project Agency for Energy, “ARPA-E Impact,” June 2017. Available at:
5 National Academies of Sciences, Engineering, and Medicine, “An Assessment of ARPA-E,” 2017. Available at:

Support Research Like This

With your support, BPC can continue to fund important research like this by combining the best ideas from both parties to promote health, security, and opportunity for all Americans.

Give Now