Texas Approves Landmark $20 Billion Investment in Water Infrastructure

Texas voters approved Proposition 4 yesterday, clearing the way for a historic $20 billion investment in maintaining and improving the state’s water supply over the next two decades.

The decision marks the largest single investment in water in the state’s 180-year history, presenting a significant opportunity for the construction industry to address urgent infrastructure needs.

The Need to Secure Water Resources

The approval arrives at a critical time for Texas. The 28th state has a growing population, aging infrastructure, and a harsh climate, which is placing strain on the state’s water resources.

These challenges in Texas have led to agreement on the need for substantial action to secure water resources for the Lone Star State’s communities and its economy.

At $5 billion, Texas was one of the top three states in US Data Center construction starts spending for the trailing 12-month period through September 2025, as reported by ConstructConnect Chief Economist Michael Guckes.

Data center construction in the US has centered on strategic site selection, emphasizing the need for sufficient land and access to critical resources, such as water and electricity, to power energy-intensive equipment.

What It Means for the Construction Industry

For the construction sector, Proposition 4 is more than just a legislative victory. The legislation around it creates a potential stream of infrastructure projects.

The monumental investment in Texas water security translates into potential commercial construction opportunities across the state.

A surge in demand for construction services, from general and trade contractors building new reservoirs and pipelines to those developing advanced water treatment and desalination plants, may present project opportunities ahead.

The water infrastructure commitment from voters and the state coffers creates additional opportunities for skilled workers and construction professionals.  

Funding and Construction Project Opportunities

The new Texas Water Fund will be financed by existing state sales tax revenue, with up to $1 billion deposited annually starting in 2027. This funding mechanism, according to legislators, will not create new taxes and is contingent upon annual sales tax collections exceeding $46.5 billion.

The $20 billion investment, although substantial, serves as a foundation for the estimated $154 billion required for Texas water projects over the next 50 years.

The funds will be accessible to both rural and urban communities, creating a wide range of potential project opportunities for construction firms across the state.

This Texas Water Service boundary map shows the concentration of resource service in the central and eastern part of the state. Image: Texas Water Service Boundary viewer

The proposition outlines two main categories for funding:

1. Water Supply Projects - These aim to increase the total volume of available water. This includes large-scale construction and engineering projects, such as building new desalination plants, constructing permitted reservoirs, and upgrading systems for water reuse, including wastewater treatment.  

2. Existing Water Programs - Funding will support improvements to flood control infrastructure, projects to ensure clean drinking water, and initiatives for agricultural water conservation.

Oversight and Implementation

The Texas Water Development Board will manage the fund’s distribution, with a special legislative committee providing oversight to ensure accountability. The process will include regular reporting on how the funds are used and their impact, along with opportunities for public input.

State regulators noted that the proposition does not automatically approve projects. Instead, it establishes the financing. All projects seeking funding must go through the standard application and approval process.