'Water is the biggest risk facing the planet'

The smart water tech market is burgeoning with innovators aiming to help companies insulate themselves from the risks connected to water scarcity.

Providing clean water and sanitation for all will be a growing challenge in years to come, thanks to a combination of poor infrastructure, population increase and climate change.

Water is the biggest risk facing the planet, bigger than climate change and terrorism, according to the World Economic Forum’s report, Global Risks 2015. Increasingly, companies are recognising this and are looking for ways to insulate themselves.

The scale of the problem is vast – 1.5 billion people live in areas affected by water scarcity. Smart water tech is seen as one of the most promising ways to address the challenge due to advances in fields such as advanced analytics, artificial intelligence, and internet of things technologies.

Understanding the potential of the demand for smarter water solutions represents a huge market opportunity, according to a recent report from the UN Global Compact, which estimates the smart water tech market will be worth $20.1bn (£15.6bn) by 2021.

One of the most appealing features of investing in smart water technologies is their contribution to the circular economy. “Water is the quintessential circular substance,” says Nick Jeffries, a project leader in the insight and analysis team at the Ellen MacArthur Foundation. “It has an inherent capacity for renewal.” However, its use remains rooted in the linear “take, make, dispose” model that means water becomes more polluted and wasted as it travels through the system.

A recent ING report looking at six water-stressed regions – California, Bangladesh, Ghana, the Netherlands, the United Arab Emirates and Northern India – concluded that “the circular economy has the potential to save 412bn cubic metres of water a year, which is equivalent to 11% of annual global water demand, or almost the entire water consumption in the US”.

 

‘It’s a very exciting sector’

Recognising this potential, a plethora of smart water tech businesses have emerged.

US company Ecolab’s water risk monetiser tool, enables companies to identify high water risk areas such as shortages, poor water quality, more stringent regulations and reputational issues. Another of its technologies, 3D TRASAR, allows users to monitor the water quality in their cooling systems detecting problems such as scaling, corrosion and biofouling. It then automatically adjusts chemical control systems and provides instant, online feedback. The company says the technologies reduce maintenance, ensure the right amount of chemicals are used, cut costs and extend the life of the system. One hotel in Pune, India, managed to save 1.8m gallons of freshwater a year as a result.

There are also vast opportunities in reducing leaks, improving irrigation, water treatment and energy recovery from wastewater.

Innovation in the market is being driven by venture capital firms such as Ycombinator and ImagineH2O, which are on the look-out for promising new technologies. Both groups are based in California, scene of a multi-year drought followed by massive floods that have caused significant disruption to the state and highlighted the need for new solutions.

ImagineH20 has recently funded Utilis, which uses satellite imagery to detect leaks in water pipelines, Arable Labs, a maker of crop and weather sensors, and Triple Bottom Line Enterprises, an app for designing affordable piped-water systems.

Apana, another ImagineH2O-funded business creates smart water management systems that use advanced analytics to give businesses greater insight into how they use water and where they can make savings. It says that businesses fail to manage their water use or notice where it is being wasted because, according to their website, “water infrastructure is complex, hard to see and easy to ignore”. But when companies have transparency about their water consumption, the results can be spectacular. Apana helped the US supermarket chain Costco cut water use in its stores by an average of 22%, for example.

“It’s a very exciting sector,” says Apana’s CEO Matt Rose. “Technological improvements will be a catalyst for change because there is significant waste and inefficiency at stake. Previously, it was difficult and expensive to create analytical systems with accurate, actionable data. Today, data integrity is the minimum expectation and the ROI as a result of the improved data has become increasingly competitive. The combination is hugely disruptive.”

Ambika Jindal, water lead and vice-president for sustainable finance at ING Wholesale Banking, says there is an untapped cashflow within wastewater which can be a source of revenue-generating products such as energy and nutrients. This makes it a very interesting sector for ING, a member of the Ellen MacArthur Foundation, to observe.

“Our clients are often major industry players who are increasingly understanding how critical water is to their business. It is in their interest to explore the opportunities that circular solutions through innovative water tech present.”

There are a lot of tools out there now, adds Jindal. “There’s no longer an excuse for companies not to measure their water use.”

It is not just companies that are taking action, says Rose. “What is really exciting is the whole smart city movement. There are solutions that will help utilities and their customers become better water stewards over the next couple of years.”

“Traditionally, the water business has been very staid and conservative. But with some of the innovations coming round the corner, in the next three to five years, the end solution for the customer will completely change,” says Rose. “There will be a move to increased flexibility rather than hard networking and an increasing focus on customers’ exact needs.”

 

This article is paid for and produced to a brief agreed by ING, sponsor of the rethinking business hub of The Guardian.

 

Photo: Irrigation pipes along a dry irrigation canal on a field near Stockton, California. Photograph: Rich Pedroncelli/AP

 

For more information on this article or subject please mail to: Ambika.Jindal@ing.nl.

 

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