Why is water interesting?

Being part of a generation where we went from off-line, to being connected via social media, seeing the shift in software business models from physical licenses to SaaS and PaaS products and services and massive globalization, I have always found it interesting to follow which industries that's about to undergo significant changes through major innovations and especially understanding why.

In a macro perspective over the course of 50-100 years, we have went through the cycles of industrialization, globalization, digitalization, and in recent years, renewable energy and electrification, boosted by climate changes and following legislative demands.

We are now in the middle of a transition where we as humans must be able to handling climate changes and a more conscious use of the earths resources.

No matter which side you are on in who to blame for this, it is for me personally interesting to see this in an innovation perspective and what it takes to "innovate" us out of a lot of the upcoming challenges the decades ahead.

Why is water relevant?

I am of course a bit biased as I have been in the water industry for some years, but no matter how you look at it, water is the foundation of keeping our societies running, not only of the basic needs like, sanitation, access to clean drinking water and sewage systems. Water is actually used in so many areas of human society and in your every day life, probably without knowing.

When you buy a pair of jeans, 10.850 liters of water is used to produce it, when you write your notes on a sheet of A4 paper, 5.1 liters of water is used. When you ask Chat GPT for some advice, one interaction is using 500 milliliters of water and when eating an apple it has taken 95 liters of water to produce for you.

Interestingly enough those at the close-to-you "applications" can sound like a lot of water is used on day-to-day living, but it is actually almost insignificant to how much agriculture and general industrial use of water.

Almost 80% of all water usage in the world goes to agriculture and industrial use, like oil and gas, mining, pharma and chemical industries.

So to put it mildly, water is the basis of our living, health and society and with the extraction of water from fresh water resources and saline water from the sea, only going up, the water industry will be one of the cornerstones for a sustainable future for human life and society.

Water as enabler against climate changes?

If you look at water, the impact related to climate change, there are 4 key mega trends where water has a massive play:

• Change in land-use: With deforestation and farming, water is needed at massive scale as this impacts the environment of intense farming and deforestation.
• Climate change: Through the earths changes in climatic cycles we are most likely to witness rising seas, flooding and more droughts across the globe which is related to water.
• Industrialization: As global population growths the need for water across industries for clothes, vehicles, packaging and other products which is water heavy is only going to increase.
• Urbanization: Another effect of population growth is related to the classic infrastructure as urbanization and high population growth makes the investments in building, renewing or expand infrastructure almost impossible in many regions of the world.

These 4 major trends is the driving forces for massive changes in the water industry and your every day life which have not undergone major changes the last 50 or so years.

So there need to be a lot of innovation done within this industry from decentralized water utilities, new ways of creating drinking water, water re-use, and new innovations in materials for i.e. packaging to minimized the use of water making those.

Water is the basis of our living, health and society and with the extraction of water from fresh water resources (3,5% of all water on earth) and saline water (very energy consuming) from the sea only goes in one direction, this industry will be one of the cornerstones for a sustainable future.

Who can change status quo?

Major players like Xylem , Veolia , GRUNDFOS , 西门子 , Aliaxis , 丹佛斯 , GF Piping Systems and alike are part of the equation, but since they are already major players within their respective industries the pace of transformation within those companies is simply not fast enough.

So a combination of local privately and government owned water utilities, venture and private equity funds as well as regional water start- and scale-ups will be key in the upcoming years to solve the future of water where the challenges grow day by day.

So what is the value of innovating within the water industry?

First of all it is almost unavoidable that a massive increase in investments in water is coming in the next decade, simply due to the changes in climate, population growth and a need for much more sustainable living for humans.

If you look at water infrastructure renewal in existing water infrastructure setups, the rate to keep the service level as is today it has to double in rate of investment.

When looking at water scarcity to fight lack of water in an increasingly number of places around the globe, the investments have to be 5 times compared to today.

If we have to be better in reducing the costs and risk of flooding and storm water related challenges, a 10 times the investments as of today must be made.

When it comes to water quality, the investment must be more than times 3 to keep up with the challenges around the quality of water from pesticides, PFAS and other contaminants.

In areas where lack of access to clean water we have to invest more than 8 times what we do today to be able to cope which this massive challenge in the most poor parts of the world.

An overseen area related to water is the increase in massive wildfires that causes not only death but also comes with huge costs. If we are going to prevent and be better in controlling these as a result of climate change, a wobbling times 100 in investments has to be made.

So in total already in 2024 it is estimated the the water related economy will surpass 86 Trillion USD. Over the next decade there is nothing in the horizon that tells that this number will decrease, it will only increase as the challenges becomes more imminent across the globe.

My hope for the future is that the industry will collaborate even more across industries and especially together with local start- and scale ups and funds to boost innovation as most of the new ground breaking innovations will not come from the existing major players at the pace we need them.

For further insights I can highly recommend the latest report from XPV Water Partners which can be found here: https://xpvwaterpartners.com/insights/news/2024/02/05/report-investing-in-a-water-secure-future