This is an excerpt adapted from "Digital Water: Enabling a More Resilient, Secure and Equitable Water Future" by Will Sarni. Reproduced here with permission from the author.
Digital technologies and water
The world is in a rapid and painful transition from believing that water was plentiful and free (or at the very least inexpensive) to facing the impacts of water scarcity, poor water quality and the variabilities of hydrologic events from climate change. This realization is slowly unfolding as the public sector faces the realization that policy reform is urgently called for to address human tragedies unfolding in cities such as Flint, Michigan and Cape Town, South Africa. Cape Town is not alone as other global cities face a similar water scarcity crisis: Bangalore, India; São Paulo, Brazil; Beijing, China; Cairo, Egypt; Jakarta, Indonesia; Istanbul, Turkey; Mexico City, Mexico; London, England; Miami, Florida, and Los Angeles, California.
The private sector is also slowly recognizing that water risks impact business continuity and growth along with brand value from their actions in managing water as a shared resource. For those industries that rely upon water for manufacturing (e.g., food, beverage, manufacturing, and semiconductors) access to water is essential for current operations and projected business growth.
What the world is now experiencing can no longer be framed as"normal." The past can no longer be used to predict seasonal weather events and precipitation (e.g., a loss of stationarity). Increasing population growth places demands on the need for water and negatively impacts water quality. As a result, there is a pressing need for: new public policies and business strategies; and innovation in technology, financing, business models and partnerships to thrive in the 21st century. These new policies, strategies and innovative solutions are only possible with better and accessible data and actionable information. We need to deploy digital solutions (information and communication technologies (ICT)) to enable the more efficient and effective use of water data for public sector business, societal, and ecosystem needs.
The water sector is now in the early but accelerating stages of learning the value of adopting digital technologies to solve water scarcity and quality issues. The transformation of the water sector through digital technologies is similar to the experiences had by other sectors. The electricity sector provides perhaps the most relevant example of the benefits of ICT, with dramatic effects that are still unfolding. The move to smart buildings and grids, microgrids and renewables has been transformative in providing cost-effective electricity in emerging and developed economies. The overall impact and value from adoption of ICT has been well documented through the work of the Global e-Sustainability Initiative (GeSI). GeSI has quantified how the sector through digital technologies has improved energy efficiency and, in turn, reduced greenhouse gas emissions.
Imagine the same transformation in the water sector. Already, digital technologies such as remote sensing can provide vastly improved predictions of droughts and flooding, real-time monitoring of water quantity and quality within watersheds, improved water utility asset management, off-grid and localized solutions coupled with real-time water quality monitoring and "frictionless" water trading platforms. Digital technologies such as connected devices (IoT), predictive analytics, and artificial intelligence are also emerging as powerful tools in achieving sustainable, resilient, and equitable access to water.
We need to deploy digital solutions to enable the more efficient and effective use of water data for public sector business, societal and ecosystem needs.
Most recently, GeSI published "System Transformation: How Digital Solutions Will Drive Progress Towards the Sustainable Development Goals." The summary report includes a discussion of how ICT is playing the central role in achieving Sustainable Development Goal 6 through water efficiency and increasing access to water through "smart water management" — smart pipes, smart meters, soil sensors, remote irrigation management systems, consumption control applications and e-billing.
A recent issue of The Economist featured an article titled "The Plague Year: The Year When Everything Changed." Few will be surprised by this title. However, aside from the COVID-19 reflections, the article provides insights about lessons learned from several events from the early part of the last century. The article explains that "the horrors of the first world war and the ‘Spanish Flu’ were followed by the Roaring Twenties, which can be characterized by risk-taking social, industrial and artistic novelty."
In 1920, U.S. presidential candidate Warren Harding built his campaign around "normalcy." What unfolded was not a return to normal. According to the economist, the survivors of the Spanish Flu and the First World War left survivors with "an appetite to live the 1920s at speed."
I am willing to place a bet that our view of water, including the more traditional view of the water sector — think utilities, solutions providers, NGOs — will not return to normal. And, frankly, we shouldn’t go back. The water sector from a technology, business model and funding perspective will be transformed, driven by lessons learned from the pandemic but also due to the natural rhythm of "creative destruction."
I believe this is the year where creative destruction will transform the water sector and our view of water. In the early 20th century, the economist Joseph Schumpeter described the dynamic pattern in which innovative entrepreneurs unseat established firms through a process he called "creative destruction."
According to Schumpeter, and discussed in detail in "The Prophet of Innovation: Joseph Schumpeter and Creative Destruction," it is the entrepreneur who not only creates invention but also creates competition from a new commodity, new technology, new source of supply, and a new type of organization. The entrepreneur creates competition, "which commands a decisive cost or quality advantage and which strikes not at the margins of the profits and the outputs of the existing firms but at their foundations and their very lives." This innovation propels the economy with "gales of creative destruction," which "incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one."
Schumpeter’s view of creative destruction was applied to the emerging trend of sustainability in 1999 by Stuart L. Hart and Mark B. Milstein in their article, "Global Sustainability and the Creative Destruction of Industries." It was this article that first got me curious about the cycles of creative destruction and its relevance to the water sector.
For me, the key point from Hart and Milstein is that with technological innovation, there is a dramatic transformation in institutions and society. The technology innovation — and, in turn, transformation in institutions and in society — creates profound challenges to incumbent businesses. Historically, these incumbents (the installed base) "have not been successful in building the capabilities needed to secure a position in the new competitive landscape."
What does creative destruction and disruptive innovation mean for the water sector? I believe it will, in general, be the democratization of water. It will be an "end run" around the public sector, infrastructure and traditional financing of innovations to deliver universal and equitable access to safe drinking water, sanitation and hygiene.
I believe we are now entering the roaring '20s for water.
The creative destruction of water will include real-time and actionable information on water quantity and quality and increased access to capital to scale innovative solutions such as air moisture capture, decentralizing water treatment and reuse systems at the residential and community scale.
The water sector is poised to undergo a "gale of creative destruction" to a large degree instigated by the pandemic. The accelerated transition to using digital technologies is also an enabling tool, in addition to providing readily accessible actionable information to the general population. I believe we are now entering the roaring '20s for water.
A word (or two) of caution
I am an avid believer that the application of digital technologies is the most important trend in the water sector. However, innovation is lumpy, and outcomes can be unexpected. We need to be mindful that immediate gains in productivity didn’t come quickly from the birth of the ICT sector and the internet. In the United States, the Labor Department statistics in the late 1990s signaled an increase in productivity from the ICT sector. However, this productivity was not sustained and stalled around 2005. Several factors could account for this, including the 2008 recession.
Time will tell how the digital transformation of the water sector will unfold and if our predictions of value creation and productivity gains are realized and over what period of time. The central issue with digital transformation of a company, public sector, industry, etc., are people. It is wise to keep this issue at the forefront when we consider disruptive innovation such as digital technologies.