Amir Peleg on how the water industry is lagging behind when it comes to adopting sophisticated technologies

According to the Global Risks Report 2013, “water supply crises” was ranked second out of 50 in terms of impact. Only “major systemic financial failure” was placed higher, while “chronic fiscal imbalances” and “food shortage crises” were placed lower. Also, the likelihood of water supply crises was listed fourth out of 50. Clearly, improved water management is essential. However, it will not occur without innovation.

The water innovation and investment gap

There is a gap between the perception of the water crisis and the increasing need for innovation and investment in this sector. According to the OECD Environmental Outlook to 2050, global water demand is projected to increase by 55% between 2000 and 2050, by which time over 40% of the global population is likely to be under severe water stress. Insufficient water supply could result in food shortages, demographic changes, political strife and even armed conflict.

Water networks suffer from a deteriorating infrastructure in drastic need of capital investment. Technologies that provide superior performance at lower costs and improve the productive and responsible use of natural resources are needed to meet these challenges in a sustainable manner. Developing such technologies requires investment.

As cited by the Cleantech Group i3 Platform, out of the 2012 venture capital funding directed towards cleantech, only 5.4% was invested in the water sector with the majority going towards the transportation, energy efficiency and alternative energy sectors.

Why does such an investment gap exist? One reason is that the water industry is perceived as conservative and slow-moving. Another is that water is undeniably underpriced, affecting the perceived return on investment in making networks more efficient. This, in turn, yields lack of venture capital interest with only a handful of visionary funds looking for water investments.

The golden triangle of innovation

Innovation is neither an “invention” nor a “eureka moment”. For the innovation cycle to occur, three components need to coincide: a real market need, human entrepreneurial leadership and the funding capital. These three elements, somehow interdependent, create the golden triangle of innovation. The higher the exposure that capital providers and entrepreneurs have on water issues, the more players will start the innovation cycle, and the better the water future will be for us all.

Large-scale innovation is the only way to transform the industry and to alleviate the water crisis by providing creative and sustainable solutions to age-old problems of water production, transportation and distribution. For instance, the use of integrative technologies, such as smart water networks, allows operators to save water, energy and time without great investment in infrastructure.

A call to action

Water is not “the new oil”. There is no substitute for it; no alternative sources. Desalination and transport of water are expensive and energy-intensive. They alone cannot resolve the problem on a global scale. The water crisis cannot be solved simply by conservation and infrastructure investment; it calls for a new wave of creative thinking. The industry needs a call to action. It is now up to us – entrepreneurs, investors and water experts – to deliver. Together, we can work to resolve the innovation scarcity in the water sector. The future of global water management is in our hands.

Author: Amir Peleg is Chairman of SWAN (Smart Water Networks Forum); the Founder & CEO of TaKaDu; and winner of the World Economic Forum Technology Pioneer 2011 award.

Image: Water is seen dripping from a pipe in Belfast REUTERS/Cathal McNaughton