Cool clean water

It could be Copenhagens saddest outcome! The predominant interest in reducing
the emission of CO2 in order to combat climate change has, for no obvious reason, drawn the attention away from an more urgent and growing problem: the shortage of clean water.
Nowadays we face a real and a growing shortage of clean water world-wide.

It could be Copenhagens saddest outcome! The predominant interest in reducing
the emission of CO2 in order to combat climate change has, for no obvious reason, drawn the attention away from an more urgent and growing problem: the shortage of clean water.
Nowadays we face a real and a growing shortage of clean water world-wide.

Todays and tomorrows scarcity
For the average inhabitant of a country full of water, like the Netherlands, it is hard to imagine water supplies running dry, but for corporations, water is fast becoming part of their strategy. In 2004 Coca-Cola and Pepsi had to close a number of plants in India. Local agriculture, but also people in cities, claimed that the local branches of both companies used too much water.
In 2007, the Tenessee Valley Authority had to reduce the power of its hydro-electric power station by 30%, because of a continuous drought affecting the water level.
The above examples are neither isolated nor incidents. This is especially true if we assume that the economic and demographic growth will continue the next decades. At todays standing, existing supplies will only be able to meet 60% of the world-wide demand in 2030.
The situation is even worse for some regions in the emerging markets. Countries such as China and India will face enormous shortages by 2030. Those shortages are partly the consequence of the economic growth and the accompanying growth in prosperity. At the same time, these shortages pose at treat to the same economic growth and prosperity.

Looking for solutions
Increasing shortages in large parts of the world will increase the price of water. At the same time it will also intensify the struggle between parties concerned to gain access to water supplies, thus leading to more regulation. Companies in most industries should develop (production) processes that require less water. This is a challenge and at the same time an opportunity. It is an opportunity for companies that develop products and services that increase waters productivity. I am talking about new techniques and services for large-scale consumers like agriculture, mining, utility companies and the IT-sector, just to name a few.
In order the close the ever widening gap between supply and demand, regions and sectors will have to invest an estimated annual $ 50 to $ 60 billion. Fortunately, until now these investments have proven to bear fruit within three years.

From product to solution
So far, experience has taught us that the mere supply of a product or service with a higher water-efficiency does not automatically lead to success. It is just not enough. Especially in the professional markets, the demand for so-called ‘total solutions’ is rising.
This means that suppliers will not only have to reduce the use of water but also the power consumption along with it. Successful suppliers will have to figure out first what products and services add most value to the Total change of water control and water productivity. Subsequently, they will have to be able to market those products. But for all marketing efforts to bear for fruit, suppliers will also have to study (future) regulations.

Big players, such as ABB, GE and Siemens have already obtained a position in the water market. A company like IBM sees opportunities and even the oil companies expect to market their drilling techniques in the young water market.

No univocal market
The water market isn’t a univocal one. The problems countries like Brazil or South-Africa will be facing, differ considerably from those China and India will be (or are already) encountering. The solutions for the latter two will be different and more radical than those that will have to be adopted by the former two.
Roughly speaking, there are three submarkets in the water sector:

a. Treatment (purification) and distribution. This segment focuses on the purification and distribution of drinking- and waste water. In most countries – including the Netherlands – the quality of drinking water is no longer a given. This requires large investments in new technologies like membrane technology But also the quality of waste water will have to rise in order for it to be reused in industry.

Quality improvements and infrastructure that safeguard the distribution of drinking-water will require the investment of hundreds of billions of dollars in the next couple of decades. Those investments will mostly be made in the known/existing emerging markets

b. Industrial efficiency. Nowadays, the energy and industrial sectors account for 16% of the world-wide demand for water. By 2030, that percentage will have risen to 22%. China (off course) needs most water. Increases in prices and regulation will encourage both sectors to develop technologies that guzzle less water.

C. Agriculture. This sector accounts for 70% of the total demand for water. A lot can be gained in this segment. This requires large efforts in multiple areas, such as better irrigation techniques, different kinds of fertilizer, a better infrastructure in the countryside in large parts of the world. It also requires new ways of finance that enable the farming sector to make the necessary investments. Withouth a doubt the farming sector poses the largest challenge and fast improvements of the water productivity are the least likely.


To conclude
Without a doubt, the water market is a growing market. However, it is a market with growing pains and problems. Often the market is fragmented and very local.
It is also a market where regulation is still premature. Current and future players
have a long way to go before all problems will have been solved and the market will indeed prove to be the growing market it potentially is