Emerald Group Publishing Limited
Copyright © 2009, Emerald Group Publishing Limited
Global water industry to reach US$1 trillion by 2020, says new research
Article Type: Feature From: Management of Environmental Quality: An International Journal, Volume 20, Issue 3
Water is the one essential resource for which there is no substitute, and rising demand threatens crisis. But executives and investors aiming to harness these trends have been consistently flummoxed by water’s fragmented business segments, hyper-local markets, and long adoption cycles. A new report from Lux Research cuts through the confusion by mapping and forecasting the US$522 billion “Hydrocosm” of water-related businesses for the first time – projecting that a new approach of “water cultivation” characterized by efficiency, reuse, and source diversification will be required to meet rising needs.
“By 2030, the world will use 40 per cent more water than today and nearly half of the world’s population will face severe water stress,” said Michael LoCascio, Senior Analyst at Lux Research and primary author of the report. “The world will avert crisis by cultivating water as a durable asset rather than throwing it away as a consumable – creating growth opportunities in everything from oxidizing new contaminants to rehabilitating creaking infrastructure.”
To make sense of water’s complex landscape, the Lux Research team interviewed 66 water experts worldwide, inventoried all water financing transactions since 1998, built a multivariate regression model to forecast water demand, and conducted exhaustive secondary research including modeling revenues of more than 300 water-related companies. Some of the highlights of the report are:
Total water-related revenues stand at $522 billion in 2007: $385 billion in services, $64 billion in equipment, $9 billion in chemicals, and $62 billion in bottled water. Approximately, 14 per cent of total revenue derives from developing technologies and business models poised for growth, such as the $3.3 billion desalination equipment segment.
Revenue will grow to $961 billion in 2020 as specific growth segments such as zero-liquid discharge, UV disinfection, drip irrigation, and metering and monitoring break away from the ranks.
Investors have flocked to water technologies: of $1.12 billion in venture capital funding since 1998, 59 per cent has been invested in just the past two years. In the last 10 years, 506 water M&A events have occurred worth $176 billion in deal value while 39 water IPOs have raised $4.8 billion.
A few key areas – including next-generation desalination, waste management, energy mitigation, infrastructure integrity, advanced oxidation, and water sourcing and transport – dominate near-term growth opportunities.
The 133-page report, entitled Water Cultivation: The Path to Profit in Meeting Water Needs, includes market sizes and projections for 85 water-related business segments through 2020. It offers a concise introduction to the technologies and business models in water as well as in-depth analysis of the forces shaping their future outlook. Water Cultivation: The Path to Profit in Meeting Water Needs is part of the Lux Water Intelligence service.