Nearly every region in the United States experienced water shortages in the past five years, according to the U.S. Environmental Protection Agency. At least 36 states anticipated local, regional and statewide shortages, even under non-drought conditions.
This increase in water scarcity, coupled with increased needs for water treatment, is beginning to fuel innovation and investment in "water tech."
The U.S. water treatment market is projected to grow approximately 5.9 percent a year to hit about $13 billion by 2017, according to a recent study by the Freedonia Group. This projected increase is driven by the needs of industry, such as water treatment technologies sought in the oil and gas sector for hydraulic fracturing, and in the semiconductor industry for "ultrapure" water, expected to push the global ultrapure water technology market to $4.4 billion by 2014.
The need for increased innovation and investment in the water industry is clear. However, there are challenges in commercializing innovative water technologies to address water scarcity and quality issues.
Any new technology can face hurdles in the commercialization phase, but the water industry's commercialization challenges can present special obstacles. These hurdles include:
• Disconnect between the price and value of water: Water is essentially free and, as a result, water technologies are saddled with long payback periods if one only evaluates payback based on the current price of water.
• Water tech is not just about technology: Water has economic, environmental, social and cultural dimensions, all of which should be concurrently managed, unlike resource issues such as energy. Values are associated with water and as a result, reputational risk and brand value is important. Stakeholders care about how water is used by the public and private sectors. These stakeholders can affect social license to operate for private sector companies, along with perceptions of water reuse and advanced metering systems for public sector water utilities.
• Wide variation in legal ownership and regulatory frameworks: Countries, including the U.S., may have regional and state differences in water law, coupled with numerous regulatory agencies responsible for water.
• Lack of funding for water technologies and infrastructure in the public sector: Ongoing budget cuts and pushback on government funding results in an aging and unreliable infrastructure.
• A fragmented marketplace: Numerous water supply and treatment utilities are in operation, along with different types of water managed, including fresh, potable, brackish, salt, gray water, etc.
• Risk-adverse culture in the water industry: Risk taking is not readily embraced, in part due to the need to safeguard public health in managing water supplies. This also drives the need to pilot technologies to guarantee performance. Customers require long testing periods with lots of proof points and pilot tests.
• The path to commercialization is not clear-cut: The sales distribution channels for water tech are difficult to understand and penetrate.
Overcoming the obstacles
Despite these unique challenges in commercializing water technologies, there are an increasing number of success stories of how innovative water technologies have been commercialized, even to municipal and utility water customers. Nexus eWater of Australia converts gray water into near-potable water, for example, and NBD Nanotechnologies in Boston, Mass., has developed a coating that harvests water from the air.
One platform to identify and promote innovation in the water industry is imagineH2O, which runs an annual competition to accelerate the adoption of new technologies.
"Our program catalyzes entrepreneurial activity and provides a path-to-market opportunity for new businesses with innovative solutions," said Scott Bryan, ImagineH2O's CEO. "Collectively, our winners and finalists have raised over $20 million of outside capital to implement and scale their businesses -- an impressive level given the small amount of early-stage investment in the water sector."
Investors have recognized the business opportunities, and innovative companies, from startups to large multinationals, are embracing water tech.
It is an exciting time to be in the midst of this move to a 21st century water paradigm, where we value, conserve and reuse water to meet business, public and ecosystem needs for an ever-increasing global population.
Water image by kubais via Shutterstock.