The 20 most urgent questions for US water in 2018

Published September 28th, 2017

Cg head

Insight from Christopher Gasson, GWI publisher

Next week I will be in Chicago for WEFTEC, which is the big wastewater trade show serving the North American market. I don’t expect to see too many happy faces. According to the latest (July 2017) US Census Bureau data, spending on wastewater infrastructure has fallen by 27% over the past two years. Water spending is down 23%. Six months ago, you could describe the fall-off in investment as the kind of hiatus one should expect when a new president is elected promising a trillion-dollar stimulus package. Today it reads as further evidence that the US water and wastewater industry is silently confronting a crisis with many different dimensions. You can see it in the mega-mergers in the engineering sector, in the failure in Flint, Michigan, in the struggles at the Pittsburgh Water and Sewer Authority, in the surge of interest in private finance in water, but also in the new directions that water businesses are developing outside the municipal sector.

At the moment, it looks to me like one big jigsaw puzzle whose pieces don’t quite fit together. A huge trade show like WEFTEC doesn’t necessarily make these things clearer. Instead, I want to tackle the issues head on at the American Water Summit in Austin at the end of November. With that in mind, I have been lining up a round table discussion agenda which aims to answer the 20 most urgent questions for water in 2018. The list below is what I have in mind at the moment. Do e-mail me at cg@globalwaterintel.com if you have some better ideas to add to the list.

  1. Can the downward trend in capital investment be reversed? This is the trillion-dollar question: we need to understand the drivers of investment and the restraints that it is facing from a lot of different angles before we can put together a full picture of what is happening, and the actions that will need to take place to reverse the trend.
  2. What new financing will Washington offer? The consensus is that the White House has little to offer in terms of grant funding, but we need to hear from the smart people who are working behind the scenes at the White House Council on Environmental Quality about where the thinking is currently moving in terms of increased opportunities for private finance.
  3. Is big best for engineers and their clients? Nobody has fully grasped the implications of the rapid consolidation which is turning the engineering sector upside down. Probably even the CEOs leading the consolidation have yet to understand the implications fully. We need to understand the meaning of big, from the point of view of the clients, the equipment suppliers, and the firms themselves.
  4. Will utility consolidation start to accelerate? Most people agree that there are probably 55,000 too many water utilities in the US, but hitherto, small town politics and pride have stopped any moves towards meaningful consolidation. That is starting to change as regulatory requirements, financial constraints and the possibilities of technology change the equation. We need to hear about what is happening at the front line of consolidation.
  5. Will design-build pick up significant market share? There is a growing financial imperative to control costs and optimise projects, but are utilities and the engineers advising them ready to update the procurement model? It could change the whole landscape of the US water sector.
  6. How will utilities address their asset management challenges? Underground assets are at the front line of the municipal funding crisis. Will smart solutions save the day, or is there no alternative but increased investment?
  7. What does Flint mean for water? When it happened, we thought it was just a problem of lead lines leaching into the water supply, but three years later it is looking a lot nastier than that, with five officials facing manslaughter charges. We need to understand the science behind the crisis in order to project its future impact.
  8. Will treatment and reuse take off in the unconventional oil and gas business? Hydraulic fracturing has been the biggest growth market for water in the past decade. Hitherto it has been largely about trucking operations and disposal wells, but as the supply sector consolidates, will we see increased interest in treatment and reuse technologies?
  9. Where next for desal? Until now, the big debate has been whether the California coast or the Texas coast offers the better opportunity, but the real demand is for inland brackish desal. With new technologies pushing for higher recovery rates, and the prospect of commercial salt recovery, will inland brackish win the day?
  10. Is municipal reuse for industrial customers the future of sustainability in the West? Tesla’s decision to rely on Reno’s wastewater to supply its Gigafactory 1 in the Nevada desert shows that water need not limit economic growth, even in the most arid regions. Will this landmark deal open the way for others to follow?
  11. What new financing instruments will gain traction? As state and federal funding for municipalities continues to fall, cities are increasingly looking to bundle or pool assets in order to get the best financing deals. What does this new dynamic mean for the water sector?
  12. Do the markets still have an appetite for water pure-plays? The big industrials – GE and Siemens – have ejected their water interests, disappointed at the returns, but US water stocks have on average outperformed both companies. With Pentair reinventing itself as a water pure-play, and Evoqua contemplating an IPO, what do market insiders think about the prospects for water stocks?
  13. What are the lessons from Harvey and Irma? This year’s hurricane season has put stormwater management on the map as never before. How will the communities most affected invest to increase their resilience?
  14. Can technology cut the cost of combined sewer overflow corrections in half? US sewer authorities are face a $48 billion bill to bring their systems into compliance, unless they can find ways of using new technologies to solve the problem the smart way. What are the people at the front line saying about the opportunity?
  15. Can we make the Internet-of-Things safe for water? Concerns about cyber security are holding back the development of smart water networks. Where do cyber security experts see the risks, and what can be done to address them?
  16. Are community-based P3s the way ahead for stormwater management? We know how green infrastructure can improve stormwater management, but we haven’t yet uncovered a satisfactory model to finance it. The EPA is advocating a new kind of public-private partnership to address the problem; will it work?
  17. Where is the reuse revolution taking California? The main legacy of the 2011-2017 drought in the Golden State has been a surge in interest in water reuse. What can we learn from the agencies leading this revolution?
  18. Are decentralised systems the fastest growing segment of the market? As big city finances crumble, companies selling pre-engineered systems that serve off-grid customers seem to be doing conspicuously well. Is this the paradigm for the future?
  19. What is the next big thing in treatment technology? In the past five years, just two new treatment technologies – Cambi’s thermal hydrolysis and Royal HaskoningDHV’s Nereda process – have had a significant global impact. What made them successful, and which technology will be the next to break through?
  20. Where is the power now: in the technology or in the platform? Technology platforms such as Evoqua, Xylem, Trojan and Suez have been doing very much better than technology start-ups (there have been no good exits since NanoH2O). How should technology companies adjust their strategy to position themselves on the winning side?