The world’s water is a finite resource that is under increasingly higher stress from the growing global population. In 2015, the World Economic Forum ranked water crises, caused by the lack of reliable, clean water, as the most damaging short-term risk to global economies. In its review this year, the World Economic Forum has elevated water crises to its highest alert status, signifying that over the next decade, water crises are predicted to have both a very high likelihood of occurring and a very high global impact. It is clear that the demand for water is outpacing supply across the world. Evaluating and planning for water risk, both in the short- and long-terms, is vital, given the threat it poses to industry and society.
IMPACT ON BUSINESSES
By 2025, it is estimated that nearly two-thirds of the world’s population will be water-stressed, and nearly 2 billion people will live in severely water-scarce areas. Despite these impediments, nearly 90% of the global population growth will also occur in these regions. In order to tap into this abundant human capital, businesses need to carefully manage the concomitant water risk factors.
Water risks in these regions are multi-layered and often span the entire length of industry value chains. Risks at the extraction and manufacturing stage, which include unreliable water supply, poor water quality, and strict water use policies, have the potential to disrupt business activities and cause a reduction in operation levels. Water risks also exist at the supply chain level where disruption to a single stakeholder could have major repercussions along the entire value chain. Finally, businesses in water-scarce areas also face societal pressure and reputational risk factors that need to be carefully managed. Effective brand management and water accounting programs are necessary to ensure that the business presents a positive public image of its activities.
Despite water risk being a well-documented threat to many industries, businesses have only recently started safeguarding their operations against it. In the 2012 CDP Global Water Report, 68% of respondents reported exposure to water-related risks and 53% of respondents experienced at least one detrimental water-related business impact. In response to these events, industry and research institutions across the globe have been turning toward disruptive technologies as a way to mitigate water risk.
A disruptive solution changes or displaces an existing market practice and creates a new market over time. Within the water sector, Frost & Sullivan’s 2015 Clean and Green Environment (CGE) Technical Insight has identified Atmospheric Water Generation (AWG), Waterless Technologies (WT), and Water Energy-efficient Technologies (WEET) as highly disruptive technologies that could reshape the industry landscape. These technologies mitigate water risk either by minimizing consumer dependence on conventional water sources or by substituting water with other substances. While WT and WEET look to minimize or eliminate water use and associated energy costs, AWG aims to provide water-starved regions an alternative to networked water supply.
Numerous field trials of these technologies have already proven successful. Some prominent examples include the zero-energy Warka Water AWG project in Ethiopia, the Xeros waterless washing system in the United Kingdom, and Trevi Systems’ “forward osmosis” desalination plant in the United Arab Emirates. Under optimal conditions, these systems use less than 50% of the water and energy necessary in conventional technologies. Global efforts are taking place to further improve performance and lower the capital costs of these technologies, with the United States currently leading the way as the hot spot of innovation. Nearly 2,000 patents related to WT, WEET, and AWG technologies were filed in US patent offices between 2012 and 2014, and the country has a large number of well-funded projects nearing the late development phase.
On maturity, these technologies are expected to impact a wide variety of businesses, given the ubiquity of water in almost every sector. Of these, Frost & Sullivan has identified the chemicals, materials and food sector, the environment and building technologies sector, and the energy and power systems sector as having the highest susceptibility for disruption. Additionally, waterless hydraulic fracking (gas-based fracking), waterless cooling, personal water-supply systems, and zero-energy water production and disinfection systems were identified as high-impact applications of these technologies.
ADOPTION AND GROWTH
Adoption of disruptive technologies is expected primarily in developed and developing nations, given the requirement of high initial capital. However, emerging nations are often the most water-scarce regions of the world and will, therefore, benefit immensely from such technologies. When designed for developed economies, these technologies are usually compact systems with a high level of automation and minimal maintenance. However, it is possible to modify these technologies for emerging economies as is evidenced by the zero-energy Warka Water AWG system. With the primary goal of keeping capital costs low, these technologies and their applications would follow a low-energy, or ideally zero-energy, passive model of operation, and not necessarily be zero-maintenance or automated. The availability of such low-capital versions of these technologies will help increase their global penetration.
In the short term, North America is expected to have the highest adoption rates in the next 5 years, given the region-wide focus on resource efficiency and the capital available in the region. Adoption rates in South Asia, the Middle East, and Australia and New Zealand are also expected to be high, given the increasing gap in supply and demand in these regions. In the long term, widespread adoption of these technologies is expected globally, including in emerging regions such as Africa and South America.
The adoption of these disruptive technologies is expected to be bolstered by the significant improvements that some technologies offer over conventional systems. For example, waterless fracking technologies result in oil and gas of much higher purity while requiring lesser post-processing than conventional water-based or energized fracking methods. Overall, WT, WEET, and AWG technologies are predicted to have a healthy CAGR of 11% over the next 5 years.
THE WAY FORWARD
It is clear that these innovative technologies have the potential to change the way business is conducted in the water sector. Notwithstanding the promise that these technologies hold, they were found to be among the lowest funded in the 2015 Frost & Sullivan CGE study. Their development and adoption is constrained by three major factors: poor knowledge of long-term net environmental impact, lagging supporting technologies, and end-user scepticism. Increased funding and support is necessary to accelerate research and field testing activities, which hold the solutions to these challenges and ultimately the large-scale commercial acceptance and adoption of these technologies.