The great unbuilding: rethinking water infrastructure

As America’s ageing dams near the end of their lifespans, a vast transformation is under way – one that’s shaping how societies, ecosystems and investors think about resilience, regeneration and value.

Built to regulate rivers, supply energy and store water for growing cities, America’s dams have stood as symbols of its technological prowess for over a century. And yet, the same structures that once promised – and, for a time, delivered – prosperity are now revealing their limitations.

Across the United States, more than half a million dams with an average age of 64 years contain artificial lakes throughout the country’s waterways. Many are rapidly deteriorating, costly to maintain and compounding the environmental challenges of a nation facing a changing climate. Seventy percent of these ageing behemoths have exceeded their intended lifespan, and 16,000 of them are now designated as having a ‘high-hazard potential’. The question is no longer whether they will fail, but what will replace them before they do.

Undoing the dams

The Klamath River, which flows from southern Oregon into northern California, illustrates the benefits of dam removal. For decades, a chain of four hydroelectric dams blocked the river’s flow, generating just 2% of PacifiCorp’s electricity yet degrading water quality and decimating local ecosystems.

As water stagnated and warmed behind these dams, it caused downstream temperature changes that resulted in algae blooms. When algae die and decompose, bacteria consume large amounts of dissolved oxygen, which can suffocate fish and other aquatic life. If the bloom is particularly dense, it can block sunlight, killing submerged aquatic vegetation and destabilising food webs. Some blooms also consist of cyanobacteria (blue-green algae), which release toxins harmful to fish, animals and humans.

These conditions also affected fish migration, the consequences of which were starkly illustrated in 2002, when the Klamath suffered the largest salmon kill in US history. A combination of low river flows, warm stagnant water and high fish densities created an ideal environment for diseases that spread rapidly among migrating Chinook salmon. An estimated 60,000 to 70,000 adult Chinook died that year, devastating the river’s ecosystem and communities.

After years of advocacy led by local Indigenous tribes, these dams – including the largest, the somewhat ominously monikered Iron Gate – are being dismantled in what has become the world’s largest dam-removal and river-restoration project.

This USD 450 million undertaking marks a turning point for the Klamath. Ecologically, the project aims to restore natural flows, reopen migration routes and reintroduce salmon to spawning grounds. ‘The salmon’s life history capitalises on stealing ocean-derived nutrients and having migrating fish come upstream and then die, and fertilising the entire ecosystem,’ explains Morgan Knechtle, Senior Environmental Scientist, California Department of Fish and Wildlife. ‘And so their presence on the landscape is incredibly important.’

For the Indigenous tribes that spearheaded the removal campaign, the Klamath’s revival also carries deep cultural meaning. ‘Animals and fish and people are the same,’ says Sami Jo Difuntorum, Culture Preservation Officer for the Shasta Indian Nation. ‘They’re our ancestors. We were fishing people, hunting people, and everything about us is tied to the river.’

Despite these clear ecological and cultural benefits removing dams remains a controversial option. Dam removal is also an expensive project

Tensions on the ground

Despite these clear ecological and cultural benefits – not to mention that refurbishing America’s ageing dams could cost an estimated USD 64 billion – removing dams remains a controversial option. Dam removal is also an expensive project, and can often be politically charged and locally disruptive.

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South-west of the Klamath, another proposed dam removal in California’s wine-growing region of Sonoma has divided communities. The Potter Valley Project is a pair of ageing hydroelectric dams that feed water from the Eel River into turbines on the Russian River, and has supplied water to local farms, towns and industry for a century. On the one hand, their removal could revive endangered fish habitats by restoring the Eel’s natural flow.

However, doing so would also affect a region increasingly vulnerable to drought and wildfires, as Jason Jenkins, Fire Chief of the Cloverdale Fire Protection District, explains. ‘I’ve been in the fire service for 32 years, and I’ve been to every mega-fire that we’ve had throughout California. And at every one of these fires, they have a commonality: we run out of water. And we’re talking about going back a century without a solid plan and a proven method to provide for the security and safety of Californians.’

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One proposed replacement, a tunnel diversion system, could supply around 600,000 residents with water once the dams are removed. But such projects bring their own costs in the form of construction and ongoing maintenance expenses that, in turn, could lead to higher user fees.

Balancing ecological recovery with water security makes for a complex infrastructure transition. Even where the environmental case is compelling, local realities in such areas as agriculture, housing and fire management demand solutions that balance reliability with sustainability. For investors, this underscores a central point: the future of water management will depend on diverse, adaptive systems that integrate both artificial and natural infrastructure.

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The new water economy

From California to the Colorado River Basin, one lesson is clear: the age of singular, monolithic infrastructure is giving way to an era of distributed resilience. This rethinking of water management is already taking shape, as engineers and investors around the world look for ways to ensure water security amid intensifying climate pressures. And instead of relying solely on static, concrete solutions, they’re turning to flexible systems that combine innovation with ecological sensitivity.

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Such systems include digital monitoring networks, which are now pivotal for water system resilience. For example, the US Geological Survey’s National Streamgaging Network uses more than 11,000 streamgages to monitor water flows and levels, enabling decision making and planning around issues like water management, infrastructure design and water quality.

In regions prone to wildfires, investing in the installation of specialised water-storage systems for fire suppression could prove vital. In California’s Nevada County, for instance, a 330,000-gallon storage system has been proposed to supply nearby hydrants in high-risk areas, giving firefighters faster, more reliable access to water during blazes and reducing dependence on distant sources.

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Meanwhile, rather than focusing solely on damming water for power, irrigation and domestic and industrial use, new reservoirs are emerging serve additional purposes like recreation, flood control and ecosystem preservation. Such approaches recognise that modern water infrastructure must serve a broader set of ecological and societal needs.

These examples are part of what many describe as a new water economy, which represents a convergence of infrastructure investment, natural-capital valuation and climate adaptation. The UN estimates global investment needs for water and sanitation infrastructure at USD 0.9–1.5 trillion per year by 2030, encompassing areas from wastewater treatment and drought-resilient agriculture to watershed restoration and data-driven efficiency.

An important conceptual shift underlies this new water economy. Instead of viewing rivers, wetlands and aquifers as commodities to be extracted, investors are starting to see them as assets that generate crucial, quantifiable ecosystem services like clean water, carbon capture, flood protection and biodiversity. Through mechanisms such as green bonds, environmental-credit markets and sustainability-linked infrastructure funds, these services can be translated into long-term financial value in ways that preserve them for future generations.

America’s dam dilemma reflects a wider story: the global issue of so-called stranded infrastructure

Rebuilding balance

America’s dam dilemma reflects a wider story: the global issue of so-called stranded infrastructure. From coal plants to concrete flood defences, such infrastructure is increasingly becoming both financially and environmentally unsustainable. Replacing these once-essential systems will require a redirection of capital toward those that strengthen, rather than deplete, natural resilience, avoiding the mistakes that made stranded infrastructure unsustainable in the first place.

To achieve this goal, we must embrace a philosophy that sees resilience as the product of harmony between artificial and natural systems. In that sense, the ‘great unbuilding’ represents not destruction, but renewal.

The investment implications are profound. Building the next generation of water systems will demand imagination, long-term capital and collaboration between public, private and civic actors, as will equivalent transformations in other sectors – like energy, agriculture and transport – where the shift to decentralised systems is creating climate resilience through circular, regenerative models of value creation.

Protecting and restoring nature is not a moral trade-off against prosperity. It is the foundation of a net-zero, nature-positive, socially fair economy that will maintain prosperity, so that future generations can thrive in turn. If the dams of the last century embodied an industrial ambition of mastery over nature, the solutions that succeed them will embody one of mastery in and with nature, creating economic value that endures.