What happened to municipal water reuse?

Three years ago, in 2009, we published our Municipal Water Reuse Markets report in collaboration with Singapore’s PUB. It was a big undertaking – we collected information on around 5,000 water reuse projects around the world, and investigated the outlook for the technology in 23 global markets in a 446-page document. The conclusion was that although reuse was a smaller market than desalination, it was growing more quickly. The annual projected capital expenditure on water reuse was expected to grow at 19.5% per year. Capacity was expected to rise from 28 million m³/d in 2009 to 79 million m³/d in 2016.

This optimism grew out of a string of successful high-tech municipal reuse projects, including Singapore’s NEWater programme, the Orange County Groundwater Replenishment System in California, and the Western Corridor project in Australia. Water reuse is cheaper and greener than desalination, and public resistance to indirect potable reuse seemed to be eroding.

In the event, the market for municipal water reuse has been significantly more difficult than anticipated. Most forecasts made over the past three years are likely to have been proved wrong by the dismal state of the global economy, but the situation in the municipal reuse market remains disappointing even in that context. These are the problems:

• In Australia it rained, and the politicians seem to have turned against reuse. They have allowed water from the A$2.5 billion Western Corridor Recycled Water project in Queensland to drain into the sea.
• In America the combination of the municipal financing crisis, the weak housing market and the ‘La Niña’ weather pattern meant that momentum behind developing new water resources in the West has dissipated (although it may be picking up again in Texas).
• The GCC has been a strong market, particularly in Saudi Arabia and Oman, but at this stage most of the investment is going into sewage collection: the big investments in advanced treatment plants are still to come.
• The Arab Spring has proved a setback for the emerging markets in North Africa.
• In China the market has been held back by the lack of regulatory standards for the quality of recycled water, although there has been heavy investment in wastewater treatment plants.
• In Spain the financial crisis has scuppered most water projects.

Despite this catalogue of woes, the water reuse market overall has done well since 2009 – mainly because the problems in the municipal market have been offset by the dramatic success of reuse technology in the industrial sector. The hottest areas are around the natural resources industries: mining, oil and gas. As we reported in the January issue of GWI, the Canadian oil sands are a particularly hot market for water reuse technologies. Our research team is currently working on a report on the food and beverage industry. In that sector, water efficiency has become a major priority. Many of the major FMCG (fast-moving consumer goods) brands have set themselves targets for water consumption, and the only way they can meet them is through greater reuse.

It is the old story: industrial users tend to see the value of water because they have to pay for it, and they need their supplies to be reliable. Municipalities are less inclined to invest because they don’t get a return on their investments, and the need for reliability is less pressing.

We don’t need to be too down-hearted, however: when industrial water users lead, the municipal sector often follows. For example, one of the best ways of determining whether a city is likely to build a big desalination plant is to watch out for a spike in the number of small industrial plants being built. It usually means things are getting bad, and something needs to be done. When we see industrial users – even those in the food and beverage sector – getting excited about the possibilities of reuse, it is likely to mean that nearby municipalities will need to do something in the near future.

This idea that the municipal water sector has something to learn from the way that industrial water users work is something I have picked up for the Global Water Summit in Rome at the end of April (see www.watermeetsmoney.com for details). There will be a Pecha Kucha-style session entitled “Inspiration from Industry”. I hope it lives up to its label.