Pump house at a water treatment plant in Toronto, On. Credit: Loozrboy, CC BY-SA 2.0.
The management of water on the Earth is an increasing challenge, as global population grows and consequently puts greater demand on a limited resource. According to the GreenFacts Initiative
, freshwater accounts for only 2.5 percent of water on the planet, and most of that is frozen in glaciers and ice caps. Only a small fraction is available on the surface for use by living things, including humans.
Water is an essential resource for economic activity, and industry is a substantial user of water. The United Nations Food and Agriculture Organization (FAO) estimates that industry uses 18.7 percent of available water globally and 43 percent in North America. The U.N.'s World Water Development Report
says that "Water scarcity is viewed as an increasing business risk, with industrial water supply security dependent on sufficient resources," a problem that is compounded "by geographic and seasonal variations, as well as water allocations and competing water needs in a given region."
Credit: Wikimedia Commons
At the same time, the need for infrastructure, systems and technologies for managing water and wastewater offers a substantial market for industrial firms and manufacturers. Growing water stress around the world also presents an opportunity for companies to apply their innovation capabilities to improve the management of an increasingly scarce resource.
U.S. Markets for Water Supply and Wastewater Services
In the U.S. market, the water supply and wastewater industries tend to be closely aligned, requiring similar technologies and infrastructures. Both are dominated by municipalities but with increasing presence of private companies, the largest of which is American Water
, a $2.9 billion firm headquartered in Voorhees, N.J.
The water supply industry delivers water services to customers and operates water supply systems and water treatments plants. Most U.S. water utilities are municipal systems, representing 84 percent of community water systems and 98 percent of wastewater systems. American Water describes the utility segment as "highly fragmented, with approximately 53,000 community water systems and approximately 16,000 community wastewater facilities."
The water supply industry is capital-intensive, with a lot of investment in pumping stations, water treatment facilities, and pipelines. The industry is served by construction firms and suppliers of equipment, chemicals, and materials.
Market research firm IBISWorld
estimates revenues for the U.S. water supply market of $64.2 billion for 2013, set to grow at 2.1 percent per year to $71.3 billion by 2018. The firm says privatization has increased in this industry in recent years, as municipal tax revenues have dropped. Local governments have had difficulty maintaining and upgrading their systems and keeping up water-quality standards, and private companies have picked up some of these facilities. For example, IBISWorld says that in 2011, American Water bought 11 public water systems and 48 wastewater systems. This trend is expected to continue, causing the total number of enterprises to drop by 0.1 percent annually.
The wastewater or sewage-treatment industry collects, treats, and disposes of waste. As with the water-supply industry, the market is highly fragmented and most facilities are operated by municipalities, with a growing trend toward privatization. IBISWorld says this industry is growing at an annual rate of 1.3 percent and reached $42.3 billion in 2012. As with water supply, the wastewater industry is capital-intensive, with much investment going into treatment plants, pipelines, and other infrastructure.
Pipes are a key product category within the water and wastewater market. Purchased for the building construction and municipal markets, pipe products in the U.S. represented an $11.9 billion market in 2012, according to research firm Freedonia Group
. Freedonia says this market is growing fast at 8.2 percent per year and is expected to reach $17.8 billion in 2016. Piping products for sewer and drain, potable water and irrigation include plastic, concrete, ductile iron, steel, and copper, with plastic the fastest-growing material.
The Global Water Market: Opportunities for Manufacturers
Whereas water supply and wastewater services are pretty much traded domestically, the technologies have global markets that are exploited by manufacturers, service firms and contractors. Let's look at some of the key technologies and their global markets. The markets for these technologies tend to be about two-thirds municipal and one-third industrial.
Testing a centrifugal pump. Credit: KSB.
According to research firm Frost & Sullivan
, the market for pumps
in the global water and wastewater industry stood at $6.50 billion in 2011, expected to grow to $7.81 billion in 2016 at a compound annual growth rate (CAGR) of 3.7 percent. North America represents 30.9 percent of the pumps market; Europe, Middle East, and Africa (EMEA) 25.9 percent; Asia-Pacific (APAC) 34.7 percent; and the rest of the world (RoW) 8.5 percent.
The two broad categories are centrifugal and positive-displacement pumps. Single-stage and submersible pumps, both centrifugal types, each represent about a third of the market; followed by rotary (at 13 percent) and reciprocating pumps (at 11 percent), both of which are positive-displacement types. Pumps tend to be marketed through agents and distributors, with some going through direct sales and some via OEMs. Average price per unit for pumps was estimated at $2,000, and pumps have to be replaced on average every three years. Frost says end users are eager to reduce costs by replacing pumps with energy-efficient models in the short term.
for removing microorganisms in water and wastewater represented a $1.94 billion market in 2012, with the market split at about 60 percent for municipal systems and 40 percent for industrial systems. The market is split about evenly among the Americas, Europe, and the rest of the world. This segment is growing faster than that for pumps due to tightening water-quality standards in both developed and developing markets, as well as a growing world population and rapid industrialization. Frost estimates CAGR at 6.2 percent and projects a $2.96 billion market by 2019. The firm identifies the primary technologies in this area as chlorine disinfection; UV (ultraviolet) and AOP (advanced oxidation process) method; ozone; and electro-chlorination used in desalination processes for seawater and brine.
Wastewater treatment plant in Cuxhaven, Germany. Credit: Martina Nolte, CC-by-sa-3.0 de
are a key component of wastewater treatment plants, agitating the wastewater so it can be more effectively treated, and supplying oxygen that helps break down organic matter. Frost says the global aeration systems market was worth $4.9 billion in 2011 and is expected to grow at a CAGR of 6.2 percent to reach $8.4 billion in 2020. Aeration systems tend to be sold through distributors, with some direct sales and some sales through construction firms.
The two principal technologies employed in aeration systems are mechanical aeration using mixers and diffused aeration using compressed air. As with the other technologies I've discussed here, Frost says wastewater operators are trying to reduce energy consumption at their facilities. Aeration systems are a key target for replacement, as they consume about 45 to 60 percent of the energy used in a conventional treatment plant.
Frost says that industrial firms are now paying attention to anaerobic solutions because of their lower energy consumption and lower discharge volumes, reducing environmental impacts.
In future articles here at IMT Green & Clean Journal, we plan to take a closer look at markets for water and wastewater and for the products and services consumed in these industries, as well as some of the emerging innovations that will likely affect future developments for the industries and manufacturers serving these markets.