By Christine Stebbins
The competition for clean water is heating up and theworld's businesses have noticed.The need to feed up to two billion more people by 2025, boomingindustrialisation in developing countries like China, and a warming climateseen threatening the world's most precious natural resource has investorsserious about water."Regardless of what happens to the economy -- you can bet and bank on apredictable demand for water. It is a product that is essential to life," saidDeane Dray, who analyses water markets for Goldman Sachs in New York."People will largely pay 'whatever' because it is life-sustaining and there is nosubstitute. You put all those together, it is very clear why companies areenthusiastic about water."The United Nations Human Development Report for 2006 said that by 2025,if current global water consumption continues, more than 3 billion of theworld's 7.9 billion people will be living in areas where water is scarce.Indeed, conflicts over water rights are already going on in dozens of areasfrom sub-Saharan Africa to the Middle East to Australia, India, eastern Asiaand the U.S. Southwest.One expert estimates that in the next 25 years trillions of dollars will beneeded to upgrade fresh water and waste water technology and build newinfrastructure to deliver water, with the bulk of that money to be spent in Asia."Infrastructure upgrades that are going to be required over the next 25 yearson a global basis could be close to $20 trillion (10 trillion pounds)," said JohnBalbach, managing partner at Cleantech Group, a venture capital researchfirm in green technology based in Ann Arbor, Michigan.Such huge costs mean a budget nightmare for governments, a reality checkthat water companies also factor in. Eventually, they say, people in allcountries will have to ration water use by price and realise it is not a freeresource for the world."Governments globally are reaching a point where they're not able to financethe delivery of cheap water, which is why the private sector is getting morePage 1 of 3http://uk.reuters.com/articlePrint?articleId=UKN3045559020070502 5/2/2007and more interested," said Balbach.SKY'S THE LIMIT FOR REVENUES?Global private industry sales in water-related sectors are estimated at $400billion annually, including water infrastructure, treatment plants and newtechnologies to purify water. Of that total, $50 billion are bottled water sales.Big investors seem most focused now in higher-tech segments of watercompanies including filtration, desalination and purification systems. Butventure capital is also gravitating toward innovative solutions to costlyproblems.California-based Underground Solutions Inc. slips pipes underground torepair leaky pipes that were installed more than 100 years ago without everdigging up city streets."Investments in water-related technology will go up by at least 50 percent thisyear," said Nick Parker, Cleantech's co-founder and chairman.A recent Goldman Sachs report said it was likely, though, that over the nextfive years water system solutions will continue to be dominated by globalgiants including GE, Danaher, ITT and Siemens.GE's objective is to grow revenues by 8 percent every year "and we willdefinitely be north of that," said Earl Jones, general manager of GE's waterand process technologies.Dow Chemical saw revenues from its water solutions group reach $450million last year, more than double water revenues five years earlier. Dowalso bought a Chinese engineering company, Zhejiang Omex EnvironmentalEngineering Co., last summer in an acquisition aimed at water technology.EVEN RICH GETTING POORER?Agriculture and industry now account for roughly 80 percent of all water use,with the rest consumed by households.But as industries and agriculture expand, the fight for and cost of water islikely to escalate, with pressure points seen rising in Asia, Australia and theMiddle East, experts say.Even in the United States, traditionally the world's top food producer andexporter, is caught in the squeeze.U.S. plans to cut dependence on foreign oil by switching to "green" fuels hasignited an industrial boom in the Midwest as ethanol and soy diesel plantsspring up. But biofuel production consumes a huge amount of water, as docrops.U.S. fresh water supplies are also shrinking.The Ogallala, one of the largest underground U.S. aquifers, which runs fromNebraska to Texas, has seen water levels drop up to 30 feet in some spots inPage 2 of 3http://uk.reuters.com/articlePrint?articleId=UKN3045559020070502 5/2/2007the last 10 years. A five-year old drought in the Corn Belt there also hasn'thelped.Water levels in the U.S. Great Lakes, one of the largest pools of fresh wateron the planet, are also dropping."It's the most rapidly challenged critical resource in the world. It's now almosta cliche: the 20th century was the century of oil and the 21st century will bethe century of water," said Henry Henderson of the New York-based NaturalResources Defence Council.
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