Idiotopedia: Sustainability 101 - Save Our Water
This time I want to share a bit about environmental awareness and the ecosystem in Indonesia; because one of my friends shared a persuasive paper about water and sanitation. It intrigues me to understand more and dig deeper into this domain related to my green tech investment thesis. But again, as a?disclaimer: all of these statements are based on personal judgment and experiences; therefore, no intention to persuade any negative threat to any individuals or companies' movement.
Well, despite being one of the fastest-growing economies in the world, Indonesia still has a long way to go in terms of providing safe and accessible water. The government has been working on various projects to build adequate infrastructure for water treatment to improve the situation. Water investments are also exciting, linked to the UN's Sustainable Development Goals (SDGs)(1). These include the need for clean water and sanitation and good health and well-being.
As everyone is aware, the Indonesian government shouldered its responsibilities to address its water crisis. Despite the country's abundant water resources, it still has a shortage of clean water for its residents. This issue was highlighted in 2015 by scrapping a law that heavily favors private water treatment companies. Currently, Indonesia has a total water supply of about 690 x 109 cubic meters annually, much more than the demand of 175 × 109 m3/year(2). In Kalimantan and Papua, which are only 13% of the country's population, only about 70% of the water resources are exploited. Furthermore, Kalimantan and Papua are not the main bases of economic activities as Java is.
The rapid urbanization and the rising population have created increasing pressures on the country's aquatic water systems. This issue is expected to become more prevalent as the urban areas become more developed. Increased water consumption and a decrease in the availability of clean water affect both the freshwater systems and the groundwater systems. In addition, the diversion of lands for agricultural purposes and the reduction of the wetlands' buffering capacity have raised the risk of floods and droughts.?
In addition, the rising concentrations of suspended solids from human activities have also affected the water quality and led to higher turbidity levels, thus reducing photosynthesis. Reservoirs and dams can also fragment and alter an aquatic habitat. They can also cause the death of fish and worsen the water quality. Eutrophication is a leading cause of water quality degradation.
Despite this, about 2% of the population still relies on surface water for their drinking needs. Most of the country's big islands rely on water from the Public Utilities Agency (PAM - Perusahaan Air Minum) for their supply. On most big islands that use pipe water or tap water from PAM, their water is not potable. Since 2016(3), over 51 million Indonesians still lacked adequate sanitation facilities. Despite this significant uptick in the country's GDP, many still lack safe water. Ah, it looks like I am so smart to know all these numbers, but I tagged them from what I have read and learned.
Well, the implementation of the 2030 Agenda for Development aims to improve the sanitation conditions of the population in developing countries. For example, in Indonesia, the government has focused on developing a comprehensive sanitation infrastructure to manage the wastewater generated by around 853,000 households and construct clean water facilities and water treatment plants. But, in addition, despite the government's efforts to improve the living conditions of its residents, Indonesia's water sanitation plants and capital are still not able to meet the needs of the country's 240 million inhabitants.
Regarding drinking water, Danone's Aqua-Danone(4) brand is its most popular bottled water brand. The company's factories and springs produce about 10 billion liters of water each year. Aqua-Danone, the company's favorite bottled water brand, possesses 15 factories and 11 springs. However, the commercialization of bottled water has raised concerns about its effects on the environment. Two of these are the huge plastic bottles used to produce water. Due to the government's initiative, many companies have been exploring the water treatment industry in Indonesia. Some prominent projects include those in Kalimantan, Papua, and Sumatra areas.
One of the leading investors in Indonesia's water treatment industry is Adaro Energy(5), which has acquired two water processing plants. The company has been involved in the water treatment industry since around 2008. Aside from these plants, Adaro Energy also plans to participate in the government's water treatment projects, aiming to produce 4,000 liters of clean water a second.
Globally, in 2050, the water consumption of industries is expected to increase at an unsustainable rate by 400%. Over the next couple of decades, the water demand will increase at an unsustainable rate. While water availability increases, its contaminated sources are also becoming more prevalent.
Stringent regulations have raised the bar for water users to improve their water quality. This has led to the steady growth of the water monitoring and treatment industry. Well, herewith I want to share about several macro growth drivers that contribute to new capital investment requirements in sustainability areas, especially in the water monitoring and treatment;
Even though the technological limitations of legacy solutions have limited the solutions that can be used to address the water shortage, I believe that more innovation and awareness are needed to prevent further water challenges.?
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Water and wastewater are the world's third-largest asset class, with a market value of over $580 billion annually(6). Its high return, medium risk profile, and steady performance have made many investors an attractive investment option. As a result, publicly-traded water technology companies outperform the general market.
Several venture capital firms exclusively focus on the water-focused industry. With a global network and a unique set of resources, they can identify and pick winners in this fast-growing industry. For example, a VC named PureTerra(7) invests in the Smart Water Technology, Industrial wastewater treatment, and residential water treatment sub-sectors. Investing in these sub-sectors identifies portfolios suitable for VC investment, with shorter sales cycles, scalable business models, free-market dynamics, high uptake, and strong innovation demand.??????
As a closing of this short article, from an academic perspective, an optimized system's lifespan can help minimize the amount of water used for various purposes. Thus, the maintenance and operation of such systems can be managed more cost-effectively than those of new construction. Although rehabilitation is more cost-effective than building new infrastructure, it still requires more time and resources to complete. Therefore, doing so should be considered for the long-term benefit of the investment project for the water challenges.
Well, the population has a right to know how their money is being spent. Data sharing is one of the best ways to ensure that the public is not cheated out of money. This initiative involves transforming an existing financial institution into a system focused on practicality and delivering the best possible services to the population, especially in the environment.... thus, saving our water and planet! The future is already in here, just not evenly distributed yet! Please stay healthy, happy, and sane!
And please enjoy the journey!
(1) Ref to Sustainable Development Goals |-United Nations - https://www.undp.org
(2) Ref to Strengthening the Resilience of Indonesian Water Utilities -?
https://documents1.worldbank.org
(3) Ref to https://water.org/our-impact/where-we-work/indonesia/
(4) Ref to https://aqua.co.id/en
(5) Ref to https://www.adaro.com/
(6) Ref to Charting Our Water Future https://www.mckinsey.com
(7) Ref to https://pureterra.com/