Water tariffs are on the rise throughout North America and around the world, as we all try to figure out how we’re going to meet the unstoppable water needs of global population, ever larger cities and expanding industrial development. A recent report released by Lux Research projects that disruptive technologies and business models will yield profits as revenues in the water industry will grow from $522 billion in 2007 to nearly $1 trillion in 2020. The dependent relationship between energy, water and food is now clearly defined. Throw climate change into this mix and we have the making of the most exciting and important times to be investing in new water innovations.
It’s time once again for Canada to step forward and build the next generation of successful water companies on the world stage. We’re fortunate: we don’t have to start from scratch. We’ve already built some pretty good winners in ZENON Environmental and Trojan Technologies, both of whom changed the way the world treats drinking and industrial water. A recent report entitled Canada’s Pathways Toward Global Innovation Success, released by the Conference Board of Canada in October 2008, identifies water management technologies as one of three areas upon which our nation should focus to create economic prosperity.
So-what would it take for Canada to get ahead of the curve and capture the prosperity that will be generated by the growing water industry? First we need to unite our research base. Take Ontario for example. A Water Campus that connects and aligns water research could focus on near-term and longer-term commercial opportunities such as energy reduction in water treatment. Link the university expertise of Waterloo, McMaster, Guelph and others with industry, capital and entrepreneurs. Under a common vision, such a network could go after the major pain points of water and wastewater treatment.
We have another great asset in Sustainable Development and Technology Canada (SDTC) which manages over $1 billion in funding to help demonstrate new green technologies. SDTC has a specific allocation and focus for water. We should encourage partnerships with provincial and municipal governments and SDTC to demonstrate new water technologies-especially as governments move to rebuild failing infrastructure as part of the soon-to-be-launched economic stimulus packages.
Let’s also encourage programs and policies that further increase the availability of angel and venture capital for new water companies. These can take the form of angel tax credits or investment matching programs for VC funds.
On the topic of infrastructure renewal (and in particular, when it comes to water infrastructure renewal), industry should partner with the federal, provincial and municipal governments to develop demonstration sites for new Canadian water technologies similar to some of the initiatives found in places like Israel and Singapore. We have a great base of companies and experienced people to build upon, but we need a real program of strategic demonstration to help acquire one of the crucial elements of commercialization-a reference customer. One of the keys to ZENON’s success was landing the City of Collingwood as a reference site for their new membrane technology. When global customers came calling, the company had a leading-edge showcase facility. External technology validation at home will be critical if we want to drive strong growth in export markets around the world.
By strengthening the weak links in our water company ecosystem, we could launch a truly exciting second generation of water companies. These companies will help solve some of the world’s water demand and delivery problems, employ thousands of people in high value, knowledge-based jobs here in Canada, become leaders on a global scale, and most importantly remain Canadian-owned once successful.
Is your company ready to address global water opportunities? Are municipal water operations ready to embrace new water management technology that will improve local services and provide a global platform for new Canadian innovation? Are government policy-makers ready to align programs and policies that will continue to protect our valuable water resources and generate a new wave of economic prosperity? If the answer is yes, then Canada will be a in a position to capitalize on the incredible wealth that will be created as the world transforms how it produces, manages and consumes its fresh water.
David Henderson is the managing director of XPV Capital Corporation, a Toronto-based water investment firm.