How many water clusters does the world need?
Published 21st October 2010
I have been in the Netherlands this week to speak at the Wetsus event in Leeuwarden. The subject was know-how clusters in the water sector. It seems that everyone wants a cluster these days.
The idea grew out of the American economist Michael Porter’s book, The Competitive Advantage of Nations. He goes back through history looking at why different industries (like movie-making, hi-tech, and international finance) have ended up being located in different places (like Hollywood, Silicon Valley and London). The rise of China has put the issue of national competitive advantage into much sharper focus. Governments want to develop “China-proof” industries in selected niches with good long-term growth prospects. The idea is that if they can get a critical mass of people with unique skills in one industry, it will be difficult for cost-based international competitors to undermine it.
The problem is that every government pursuing the “cluster” strategy seems to think of exactly the same thing, so we have Silicon Glen, Silicon Alley, Silicon Bog, Silicon Fjord, Silicon Pampas, Silicon Polder, Silicon Fen, and even Silicon Implant (the “eco-dome” proposed for the Dubai Techno Park). Other popular subjects for clusters are bio-technology, green energy and of course, water.
The problem with water as a subject for a cluster is that the industry is never likely to gravitate to a single geographic location. People use water all over the world, and the water business has grown up all over the world to service that. Even if you decide just to focus on the hi-tech end of water treatment technology, it is difficult to corner the market in developing that technology because different countries face different challenges. In the Netherlands, for example, there is no difficulty with water scarcity, but there are challenges surrounding the Water Framework Directive. In Singapore, water scarcity is a bigger problem, but issues such as the reduction of diffuse pollution from agriculture to meet EU standards are just not relevant.
My suggestion to the Wetsus event was to abandon the idea of a water technology cluster, and instead to focus on building the Netherlands’ competitive advantage in “value from waste” technologies. The Dutch have really picked up on the “cradle to cradle” concept of designing materials and processes so that all waste can be reused in other processes and materials. They have some great companies in this area (such as Paques and Norit) as well as the support of their multinationals such as Shell and Philips. It is also an exciting thing to be involved in. The world is going to have to rethink the way it uses resources if the human population is going to continue to thrive and grow.
The problem is that no matter how important the waste sector is and how dynamic its growth prospects, it can never compete with water in the public’s imagination. These clusters are not just about creating an industry that won’t be outsourced to China, they are also about national branding, and as brands go it is difficult to beat the life-giving force of water. I suspect the Dutch will only listen to my advice once each of the 192 members of the United Nations has its own water technology cluster.