What needs to be fixed are some 73,000 drinking water systems across the U.S., according to the EPA—some of which date back to the late 1800s.

That includes spending $319 billion on replacing or refurbishing aging or deteriorating pipelines, as well as upgrading or constructing new treatment plants to reduce water contamination.

Funds will also be required to reconstruct storage reservoirs, water-intake structures and wells.

"A lot of these systems have passed their shelf life," said Cindy Wallis-Lage, president of Black & Veatch, an infrastructure consulting firm.

"They may still be adequate, but we definitely need more reliable systems going forward," she said. "We see pipes breaking every day in places like New York, San Francisco. Businesses have had to close because of this."

(Read More: Drop in US Underground Water Levels Accelerates)

"Besides the dangerous threat of disease from contaminated water, the economic impact from not upgrading the system is serious," said Islam.

"The American Civil Engineers said that gross domestic product losses from not upgrading could be $416 billion by 2020 from the constant system breakdowns and constant repairs instead of doing it right," he said. "We lose about 1.7 trillion gallons of water a year from pipe breaks."

Adding to the problems is that the nation's water supplies are running low. Between 2000 and 2008, levels in aquifers—the vast underground storage areas tapped for agriculture, energy and human consumption—dropped at a rate three times as great as any time during the 20th century.

Most of the drop is due to growing human consumption, coupled with drought conditions, the U.S. Geological Survey said last month.

"The main issue moving forward is not generally scarcity of water, but how to have fresh water for human consumption and clean water for manufacturing processes," said Jose Lopez, assistant professor of physics at Seton Hall University.