Northern Ireland could forfeit almost £11 billion in potential economic growth by 2040 unless significant investment is made to modernise its ageing water and wastewater infrastructure, according to a newly published economic assessment. The report concludes that years of underinvestment in the region’s water network are increasingly constraining residential development, commercial expansion and wider economic activity, creating long-term barriers to growth that extend well beyond the utilities sector.
Commissioned jointly by organisations representing the construction industry, housing associations and the Northern Ireland Chamber of Commerce, the study argues that addressing wastewater infrastructure deficiencies should become a strategic economic priority. Researchers warn that unless funding mechanisms are strengthened, limitations in the existing network will continue to restrict new housing developments, delay investment projects and reduce the region’s overall economic competitiveness.
The report also reopens debate over how Northern Ireland should finance future water infrastructure improvements, proposing a modest annual household contribution as one potential means of providing the long-term funding certainty needed to support major upgrades.
Decades of Underinvestment Continue to Restrict Development
According to the report, persistent underfunding of NI Water has created significant shortcomings in wastewater infrastructure, leaving parts of Northern Ireland unable to accommodate planned housing developments and commercial investment.
Wastewater treatment capacity has emerged as one of the principal obstacles affecting new construction across several areas of the region. In numerous locations, existing infrastructure is operating at or near capacity, preventing planning approvals for new residential developments and limiting opportunities for economic expansion.
Industry representatives have repeatedly argued that insufficient investment in essential infrastructure is slowing economic activity and contributing to the region’s ongoing housing shortage. Developers have highlighted wastewater capacity constraints as a major factor delaying projects despite sustained demand for new homes.
The latest report reinforces those concerns by suggesting that infrastructure limitations are no longer simply an operational issue but a significant constraint on Northern Ireland’s broader economic performance.
Economic Modelling Projects Nearly £11 Billion Growth Gap
The economic assessment was prepared by economist Andrew Webb of consultancy OCO Global, who used detailed economic modelling to estimate the long-term consequences of continued infrastructure constraints.
The study examined three separate scenarios to evaluate Northern Ireland’s potential economic trajectory through 2040.
The first scenario establishes a baseline forecast, projecting growth based on historical economic trends without major structural changes.
A second constrained forecast incorporates the continuing impact of wastewater infrastructure limitations, illustrating how restricted development capacity could suppress investment, reduce construction activity and slow economic expansion.
Finally, the report models a success forecast, representing the economic outcomes that could be achieved if wastewater infrastructure constraints were progressively removed through sustained investment.
Under this more optimistic scenario, Northern Ireland would experience significantly stronger economic performance, with higher levels of housing construction, business investment and employment contributing to broader economic gains.
Comparing the constrained and success scenarios, Webb estimates that failure to address infrastructure deficiencies could leave Northern Ireland’s economy approximately £10.9 billion smaller by 2040 than it otherwise could have been.
The report concludes that the cumulative effect of delayed, reduced or displaced development would generate increasingly significant economic consequences over time.
Water Infrastructure Viewed as Foundation for Economic Growth
Researchers argue that wastewater infrastructure should be viewed not merely as a public utility but as essential economic infrastructure supporting investment across multiple sectors.
Modern water systems enable housing development, commercial property construction, industrial expansion and public infrastructure projects. When treatment capacity becomes constrained, developers may be unable to proceed with approved projects, resulting in lost investment opportunities and reduced economic output.
The report suggests that addressing wastewater bottlenecks would unlock additional housing supply, facilitate business expansion and strengthen Northern Ireland’s long-term competitiveness by providing greater certainty for investors.
Construction industry representatives have consistently emphasised that infrastructure investment generates broader economic benefits extending well beyond the utilities sector through increased employment, productivity and regional development.
Household Levy Proposed as Long-Term Funding Mechanism
To finance the required infrastructure upgrades, the report revisits the possibility of introducing a modest household contribution dedicated specifically to water investment.
Researchers estimate that an average annual household payment of approximately £65 could provide NI Water with a more stable and predictable source of funding capable of supporting long-term capital investment.
Importantly, the report acknowledges that such a funding mechanism would involve short-term financial costs for households. Webb’s modelling assumes that introducing the levy would temporarily reduce household disposable income and consumer spending.
However, the analysis argues that these initial costs would eventually be offset by stronger economic performance resulting from improved infrastructure, increased construction activity and higher levels of investment.
According to the report, the long-term economic gains would outweigh the short-term financial impact on consumers, creating a more productive economy over time.
Political Opposition to Household Water Charges Remains Strong
Despite the report’s recommendations, introducing direct household water charges remains politically contentious in Northern Ireland.
Unlike other parts of the United Kingdom, households in Northern Ireland do not pay separate domestic water bills. Instead, NI Water receives funding primarily through an annual government subsidy drawn from the Stormont Executive’s overall budget.
Current arrangements require more than £300 million each year from public finances to support the utility’s operations.
Political parties represented at Stormont have consistently opposed introducing direct household water charges, arguing that additional costs would place further pressure on families already facing significant financial challenges amid the ongoing cost-of-living crisis.
The Department for Infrastructure has reaffirmed this position, stating that Infrastructure Minister Liz Kimmins does not intend to impose water charges on households.
A departmental spokesperson emphasised that the government remains committed to protecting families experiencing financial pressures while exploring alternative approaches to improving wastewater capacity.
Alternative Funding Measures Under Consideration
Rather than introducing household charges, the Department for Infrastructure has proposed alternative mechanisms to address investment needs.
Earlier this year, Minister Liz Kimmins announced plans to establish a developer contribution scheme, allowing housing developers to help finance wastewater infrastructure improvements in areas where new residential construction is proposed.
The initiative seeks to create additional capacity by encouraging private sector participation in funding local infrastructure upgrades.
Alongside voluntary developer contributions, the department is also pursuing technical measures designed to maximise the efficiency of existing wastewater systems and increase available treatment capacity.
Supporters argue that these initiatives could accelerate housing delivery without imposing additional costs directly on households.
Critics Question Effectiveness of Developer Contributions
However, the proposed developer funding model has attracted criticism from opposition parties and industry observers.
The Social Democratic and Labour Party (SDLP) questioned whether voluntary developer contributions would generate sufficient investment to resolve Northern Ireland’s longstanding infrastructure challenges.
Party representatives described the proposal as unlikely to produce meaningful improvements in housing delivery, arguing that the scale of required investment far exceeds what could reasonably be expected through voluntary contributions alone.
Critics contend that without a comprehensive long-term funding strategy, wastewater capacity constraints will continue limiting residential construction regardless of incremental improvements.
Long-Term Investment Seen as Critical to Future Growth
The report concludes that Northern Ireland faces a strategic choice between maintaining current funding arrangements or implementing more sustainable investment mechanisms capable of supporting future economic development.
While debate continues regarding the most appropriate method of financing water infrastructure, the economic modelling suggests that prolonged underinvestment carries significant long-term costs.
As housing demand continues to increase and businesses seek opportunities for expansion, wastewater capacity is expected to become an increasingly important determinant of regional competitiveness. The projected £10.9 billion loss in potential economic output by 2040 illustrates the scale of opportunity that could be forfeited if infrastructure constraints remain unresolved.
With policymakers balancing affordability concerns against long-term investment needs, the report adds renewed urgency to discussions over how Northern Ireland can modernise its water infrastructure while supporting sustainable economic growth, housing delivery and future prosperity.