Water solutions are needed to address both demand and supply issues. On the demand side, water metering, efficient irrigation systems and precision agriculture technologies can make use of existing water more efficient. On the supply side, wastewater treatment, leak detection and desalination can increase the availability of clean water.
Key Water Solutions: From Wastewater Treatment to Desalination
As changing rainfall patterns threaten fields, farmers need smarter agricultural irrigation machinery. Sprinkler and drip irrigation systems, used for sustaining crop growth and moisture, are benefiting from new technologies that reduce water wastage and improve productivity. With help from government subsidies, supportive policies and innovation, the market is forecast to post a compound annual growth rate (CAGR) of 9.5% through 2030, according to Mordor Intelligence, a market research firm. The US is the fastest-growing market for irrigation machinery. Lindsay, based in Omaha, Nebraska, sells an automated, more efficient irrigation system that saved customers more than 164 billion gallons of water in 2021.
Far from the fields that feed the planet, wastewater is another key component of water sustainability. It may sound repulsive to some, but treating and reusing wastewater—for agriculture, industry and nonpotable applications like street cleaning—is actually a massive opportunity. The UN estimates that 80% of the world’s wastewater isn’t reused, and in many emerging markets, it is released directly into the environment with devastating consequences.
Treating wastewater is a growing business. The global wastewater treatment–equipment market was worth $63.5 billion in 2022 and is projected to grow at a 4.5% CAGR rate through 2030, reports Grand View Research. Some countries are ahead of the curve, including Singapore, where recycled wastewater now supplies 40% of the country’s demand. Israel reuses 90% of its wastewater, meeting a quarter of the country’s water needs in a region that has no rainfall several months each year. Danaher, based in Washington, D.C., manufactures precision instrumentation and advanced purification technology to help analyze, treat and manage drinking water and wastewater treatment facilities.
Hotter deserts and more frequent droughts are diminishing fresh water sources. Desalination technologies are an effective way to boost supply, and they have become much more economic and less energy intensive, thanks to significant improvements in pressure exchangers and reverse osmosis filtration. Massive desalination plants are already common across the Middle East, and new, huge initiatives in countries like India offer hope for a thirsty populace. The desalination market, estimated to be worth $15.5 billion in 2022, is projected to grow by 9.4% annually through 2030.
Some diversified water companies address multiple issues. Xylem, based in Washington, D.C., provides equipment and services for transportation, treatment, testing, efficiency of use, reuse and desalination. With products that increase access to clean drinking water, reduce pollution and combat waterborne diseases, Xylem addresses key issues in both emerging and developed markets.
Keep the Taps Flowing for Growth Potential
What makes for an attractive water solutions company? Like in any industry, leading technology and products can help cement competitive advantages. Products must be extremely reliable, as drinking water, wastewater treatment and agricultural water are critical services, and product safety is paramount. Often, customers prefer to stick with technologies and products over the long term rather than switch providers for short-term cost benefits. As a result, solid business models require tight relationships with customers, from utilities to industrial companies to farmers.
Equity investors will find that water solutions offer attractive growth opportunities in an area that may be overshadowed by higher-profile climate-focused companies. But just like home plumbing is essential for modern life, companies that help keep the world’s taps flowing are integral for a more sustainable future. Investors who can find innovative providers of water solutions will be able to capture long-term growth potential that should withstand economic weakness, while addressing a fundamental problem facing humanity in developed and emerging countries alike.