Across the U.S., the future of real estate development and growth is being challenged by a shortage of fresh water. At the same time, the federal government is pushing rollbacks in both water-efficiency standards and government funding, adding even greater strain on states and municipalities as they scramble to meet ever-growing water demands—while trying to conserve dwindling supplies.
On October 22, 2025, ULI convened the Water Wise Development Coalition to discuss the latest updates on water and land use policy and their implications for both the real estate industry and the country as a whole. The meeting brought together land use experts, real estate professionals, and public sector decision makers. Guest speakers included Kelly Connolly Kern, director of public affairs at the Alliance for Water Efficiency, and Lindsay Rogers, policy manager for municipal conservation at Western Resource Advocates.
The convening revealed a number of dynamic trends in water and land usage at the federal, state, and local policy levels—with profound implications across the board.
Federal policy trends
Threats to water-efficiency programs:
We have seen threats to voluntary programs like ENERGY STAR and WaterSense, which have long-standing roots in our country and a deep history of bipartisan support.
In early 2025, the U.S. Environmental Protection Agency (EPA) announced plans to overhaul WaterSense specifications, claiming that they “drive up the cost of living for American consumers and lower the quality of household appliances.” Conservation advocates and concerned stakeholders have been pushing back, calling on years of verifiable success since WaterSense was first launched by the EPA in 2006.
WaterSense is a voluntary partnership program that promotes water efficiency through a national labeling system for products, homes, services, and more that meet the EPA’s criteria for efficiency and performance, as well as publicly accessible resources that assist with water conservation. Products and services that earn the WaterSense label are certified to use at least 20 percent less water, save energy, and perform as well as or better than regular models. Pricing is typically comparable to less-efficient brands, and product rebates and operational savings can make them much cheaper in the long run.
The Alliance for Water Efficiency (AWE) and its partners—including water utilities, manufacturers, distributors, consumer groups, and water-interested stakeholders—have been advocating for continuation of the WaterSense program since the Trump administration took office. In letters to the EPA, they argue that WaterSense gives consumers “more choices,” and in places affected by drought, it helps state and local partners to “promote and incentivize the voluntary use of WaterSense products to avoid and limit the need to impose more stringent drought restrictions.”
AWE’s factsheet on WaterSense spells out the program’s numerous benefits: “WaterSense makes it easy for consumers to reduce water and energy costs... and helps support growth, business expansion, and real estate development by ensuring adequate and affordable water supplies are available.” The group also notes: “There are more than 42,000 WaterSense-labeled products, and they cost about the same as products without the WaterSense label.”
While the House and Senate appropriations bills include language supportive of WaterSense funding, AWE is concerned that budget cuts may still be likely. President Trump’s proposed 2026 budget eliminated funding for the ENERGY STAR program, which is similar to the WaterSense program. However, broad cross-sector industry support for the program resulted in a course change in Congress. In July, congressional appropriations committees voted to continue funding ENERGY STAR.
Water-efficient appliance and fixture standards are at risk:
There has been a lot of momentum, both from the president and Republican members of Congress, in pursuit of water- and energy-efficient appliance and fixture standard rollbacks.
At the president’s direction, the Department of Energy (DOE) proposed rescinding or weakening federal water and energy efficiency standards for fixtures and appliances, and stopped enforcing existing regulations in the interim, citing the belief that these standards and regulations made “appliances more expensive and less functional.” But an analysis by Lawrence Berkeley National Labs found that, in 2024 alone, federal efficiency standards reduced Americans’ utility bills by $105 billion and saved 1.7 trillion gallons (6.4 trillion liters) of fresh water. Rolling back the federal standards and regulations now will likely lead to an increase in overall water and energy consumption, and significantly raise costs for both water providers and customers.
The DOE was also directed by the president to clarify and effectively eliminate the preemption waiver, essentially blocking states from enacting stronger efficiency measures than the federal ones. Some state attorneys general have fought back, arguing that blocking states from setting standards undermines local, tailored solutions to water challenges. Connolly Kern contended that without federal or state standards for water- and energy-efficient products, water demand will significantly increase, leading to even greater freshwater scarcity issues during historic, widespread droughts.
Implications of federal trends:
According to Connolly Kern, the implications of these federal trends could cause:
- Significant negative impact to regional, state, and local water supplies, which may lead to sharp restrictions on development.
- A patchwork of local and state efficiency standards might not provide enough protections for consumers, especially as cheap, wasteful products enter the market—not to mention the complicated compliance landscape it would present to developers.
- Higher operating expenses and lower property values for developers and investors due to increased energy and water consumption, and the strong potential for lower-quality, less-efficient equipment.
Depending on preemption, there may be opportunities to pursue changes at the state and local levels amidst the challenges of the current federal climate.
State and local policy trends
Water-efficient fixture standards:
With the uncertainty of how things will play out at the federal level, it’s really important that states adopt codes that are clear about their standards, spelling out the efficiency levels, and including language that protects against federal repeal, which we see in Colorado standards. The more states adopt WaterSense or stronger standards, the less powerful the federal fixture standards become, and the more certainty manufacturers have.
Eighteen states and dozens of municipalities have adopted requirements for plumbing products that are more water-efficient than federal standards. These requirements primarily reference WaterSense specifications, which experts say help to promote consistency and market certainty for manufacturers. AWE’s State Fixtures Matrix tracks state-level laws on fixture standards and how they compare to the federal code, and shows the WaterSense specification for each fixture. AWE recommends that every state adopt WaterSense flow rate specifications at a minimum; states with significant water supply stress should consider using the flow rates within the California Appliance Efficiency Regulations.
Water-wise landscape ordinances and limits on non-functional turf:
There are other plant species that can serve the same function and that use a small percentage of the water.
Increasingly, states and municipalities are passing ordinances that support water-wise landscaping and limit non-functional turf, especially in the western U.S., where outdoor watering of lawns and landscapes frequently accounts for more than half of all local water use. Non-functional turf refers to irrigated lawn that is ornamental and not regularly used for recreation or public gatherings. There are currently non-functional turf bans in California, Colorado, Nevada, and Utah, as well as in multiple municipalities across the western U.S. To support communities with implementation, California Water Efficiency Partnership launched NonFunctionalTurfCA.org, which features a suite of resources, including fact sheets, case studies, and sector-specific guides.
Some of these new landscape laws focus on homeowners’ associations (HOAs), such as Texas House Bill 517, which prohibits HOAs from fining homeowners for brown lawns during local watering restrictions, bans mandatory turf installation, and prohibits restrictions on drought-resistant landscaping or rainwater harvesting.
Certification for water-efficient landscape and irrigation professionals:
Professional landscapers and irrigation installers must now be licensed or certified in 10 states, as well as some municipalities such as Castle Rock, Colorado. The requirements help ensure that the landscape industry has the knowledge and tools to design, install, and maintain water-efficient vegetation and irrigation systems. Western Resource Advocates (WRA) published “Exploring Policy Options for Expanding Landscape & Irrigation Professional Certification in Colorado” to provide policy guidance to states and municipalities.
Water element in general/comprehensive plans:
We’ve seen a shift in recent years toward states requiring cities and counties to incorporate water, and specifically water-use efficiency, into their long-range general or comprehensive plans. General plans establish the foundation for integrating water into land use planning policy, setting the direction for where and how communities will grow over the next 20 years, sometimes longer.
Eight states—Arizona, California, Colorado, Florida, Maryland, Minnesota, Nevada, and Utah—and many municipalities require that water is included in general or comprehensive plans. Arizona was the first state in the Colorado River Basin to require projected future water demand and supply availability. Beyond supply and demand projections, many of these states also include requirements for water conservation.
Water reuse:
The promotion of recycled water—both non-potable and potable—through regulations, planning, permitting, reporting, and goal setting is now common. The EPA provides maps of states with water reuse regulations or guidelines. These maps identify states according to their policies on water reuse for various end purposes, including potable, agriculture, landscape, and onsite non-potable water reuse.
State funding and support for water-wise land use:
“Funding and support can be critical to help fill federal funding gaps for water-wise land use planning. Unfortunately, some state funding is also partially reliant on federal funds.”
Many states offer funding and support for water-wise land use. Colorado, for example, funds water conservation and drought-mitigation planning through state Water Plan Grants, which are funded by sports betting taxes. Many states, municipalities, and water providers also offer rebates for water-saving practices and products, ranging from irrigation system updates, efficient fixtures and appliances, and landscape transformations.
Overall takeaways
Despite the uncertainty and movement toward deregulation at the federal level, states and local governments are implementing measures to meaningfully conserve water, use it efficiently, and protect shared natural resources. Water and land use professionals note that these actions will be increasingly important as climate change, the tech industry, and population growth increase pressure on the nation’s water supplies.
There is good work for all of us to do as we move forward in our shared work.
Those interested in joining the Water Wise Development Coalition are invited to complete this interest form.
Related Resources:
- Join the Water Wise Development Coalition’s quarterly virtual events by signing up here.
- To learn more about ULI’s Water Wise Initiative, visit the Urban Resilience Program’s Drought Resilience webpage.
- Water Wise Resources List on ULI’s Knowledge Finder
- WRA’s State Water Policy & Program Database
- AWE’s State Policy Scorecard for Water Efficiency and Sustainability
- WRA’s Landscape Transformation Community Hub
