Although it is widely known that on-site wastewater treatment systems (OWTSs) are potential sources of pollution, the exact magnitude of their contribution in coastal systems has not been determined. Using a historical record of permitted systems from 1990 to 2016 combined with U.S. Census housing unit build data from 1990 to 2023, we estimate that there are approximately 282,200 permitted OWTSs treating household wastewater in the 24 coastal parishes of Louisiana (20 per square mile). Of these systems, 90% are aerobic treatment units (ATUs) that require constant mechanical aeration to achieve proper biological treatment. Inspection programs suggest 50% to 67% of ATUs are dysfunctional, discharging partially treated sewage. Using text analysis of ordinances in the two coastal parishes with the greatest number of systems, we find evidence of a multi-layered and complex system for governing OWTSs at the state and local levels. State-level policy design aligns most closely with “basic” management as described by the U.S. EPA. Although the Sanitary Code requires homeowners to maintain their ATUs, growth has outpaced the capacity of local governments. By combining the OWTS numbers with effluent data, we estimate ATUs in coastal Louisiana release 8.4 million pounds of total nitrogen (TN) and 2.8 million pounds of total phosphorus (TP) into ecologically sensitive coastal surface waters each year. This loading is equivalent to 68% of the TN and 108% of the TP discharged from all the municipal wastewater treatment plants in the entire state. Reducing ATU dysfunction to de minimis levels would reduce average loadings of organic matter, TN, and suspended solids by 660%, 240%, and 490%, respectively. Our findings suggest that the proliferation of dysfunctional OWTSs is likely contributing to the widespread and systemic erosion of water quality in coastal Louisiana.