Flood Risk Pushes Stormwater Fees Higher

Rising floods and fee backlash push utilities to prove fast results, while consolidation reshapes how stormwater products reach cities

22 Jan 2026

Stormwater infrastructure is drawing renewed attention across the US as cities confront higher flood risks, ageing drainage systems and rising public scrutiny over how projects are funded and delivered.

Local governments face a widening gap between the scale of investment required and residents’ tolerance for higher fees. As a result, stormwater utilities are under pressure to show visible results more quickly and to justify spending in clearer terms.

That tension is beginning to reshape the market for stormwater products and services, with consolidation emerging as a key response.

In September, Advanced Drainage Systems agreed to acquire National Diversified Sales, a water management business owned by Norma Group, in an all-cash deal expected to close in early 2026. The acquisition expands Advanced Drainage Systems’ reach in stormwater and adjacent channels such as retail and distribution, while increasing its exposure to residential repair and remodelling, segments that tend to hold up even as municipal budgets tighten.

Industry reports show that National Diversified Sales generated $313mn in revenue in the 12 months to June 2025, with about 90 per cent coming from the US. The scale highlights the strategic importance of the deal in a fragmented water management market. Beyond adding products, the transaction strengthens control over distribution, shelf space and how stormwater solutions are specified and installed.

At the same time, resistance to rising fees is becoming more visible at the local level. In Midland, Texas, a 145 per cent drainage fee increase approved last year and due to take effect in February 2026 has prompted public frustration and calls for greater transparency. Residents have demanded clearer explanations of how higher charges will translate into reduced flooding.

Such reactions reflect a broader shift in expectations. Communities want measurable outcomes, such as fewer flooded streets and fewer emergency repairs after heavy storms, rather than long-term promises.

For suppliers and contractors, this is altering competitive dynamics. Price alone is no longer enough. Companies are expected to help utilities demonstrate results quickly and reliably.

That demand is helping to drive mergers and acquisitions. Larger platforms can bundle products, simplify procurement and ensure availability in markets where timelines are tight and budgets constrained.

Further consolidation is likely, alongside greater use of technology and data to show performance. For an industry built around long-lived infrastructure, the immediate challenge is proving that stormwater spending delivers results residents can see.