SAM Study “Water: a market of the future” Global trends open up new investment opportunitiesTable 2: Demographic trends and urbanization of global populationSources: UN Population Division Department of Economic and Social Affairs: The Urban Agglomerations 2007; SAM.No. of cities >1 million inhabitants 1950 2000 2007World 86 387 431Africa 2 35 42Asia 31 194 218Europe 30 62 63Latin America 7 49 54North America 14 41 46Oceania 2 6 8Average size of world’s 100 largest cities (1000 inhabitants) 2200 6300 7000% of population in urban areas 29 47 50World population (million inhabitants) 2530 6125 6600Drinking water target on track Soaring demand for foodThe world seems to be on track to meet the MDG The rise in the world’s population and the improve-drinking water target, even though some countries ment in living standards are also having an impact onface enormous challenges, especially in Sub-Saharan food production. The FAO expects demand for foodAfrica. While water supply goals seem achievable, to be 55 percent higher in 2030 than in 1998. Foodit appears that the MDG sanitation target will be production must increase by 1.4 percent per annumdifficult to reach. in order to meet this demand. The surge in demand will be driven mainly by developing countries. Inten- sifying the farming methods used in these countries should help to meet most of the increased demand for food. The FAO expects the overall area under
SAM Study “Water: a market of the future”Global trends open up new investment opportunities cultivation to expand. At the same time, the amount exploitation is posing a threat to the Doñana of cropland under irrigation is likely to increase by national reserve in particular, which contains one 20 percent. This will in turn push up water con- of the most important marshlands in Europe.12 sumption by 14 percent, potentially causing local • On occasion, China’s second-largest watercourse, bottlenecks in areas such as the Middle East and the Yellow River, does not even reach the sea, or North Africa, where there is likely to be less water peters out into no more than a stream.13 available for agricultural use. These countries will • In the southern Indian state of Tamil Nadu, the UN forecasts indicate therefore be forced to import even more food than expansion of agriculture has led to a situation that almost 60 at present. where the Kaveri river, once 300 m wide, dries up percent of the on occasion. In some places the water table has world’s population Overexploitation of resources fallen between 300 and 400 m.11 will be living in urban The consequences of overexploiting water re- • Farmers in the southwest of the U.S. are feeling areas by 2030. sources are already manifesting themselves in dif- the effects of the overexploitation of groundwater: ferent parts of the planet. Once mighty rivers now The level of the Ogallala aquifer, the world’s carry only a fraction of their former water volume, third-largest underground water table, has fallen and the groundwater table is steadily falling. Eleven several meters in recent years. This has caused countries accommodating almost half the world’s many fertile regions to dry out. Many farmers population – including China, India, Pakistan, the have had to revert to more basic crops, which U.S., Israel, Egypt, Libya and Algeria – currently generate less income. Although the size of the have a negative groundwater balance. 11 irrigated area has shrunk again, it will take only another 20 to 30 years before the Ogallala 11 Lanz, K.: Wem gehört das Wasser? Lars Müller Publishers, 2006. Overexploitation of water has dramatic conse- aquifer dries up completely.11 quences at local level:12 Reye, B.: Knallrote Früchte mit üblem Beigeschmack. Tages-Anzeiger, 2007. • In the region around the Spanish city of Huelva In view of these problems, some countries have www.tagi.ch (5.10.2007). the water table has been steadily falling for some plans for large-scale canal systems to divert water 13 Den Flüssen den Weg weisen. years because many farmers illegally siphon off and alleviate the shortage in arid regions. India has Neue Zürcher Zeitung, 2006. www.nzz.ch (5.10.2007). water to irrigate their fruit crops. This over- launched a river-linking project to combine 14 rivers
SAM Study “Water: a market of the future” Global trends open up new investment opportunitiescapable of providing operators with information pumps, valves, building materials as well as engi-about the hydrological situation beneath the neering and construction firms specializing in theground. Specialist companies are now able to use water business all stand to benefit from this trend.state-of-the-art monitoring techniques to inspectexisting water sources and related infrastructure, The bulk of this growth is attributable to the bur-and carry out the required maintenance work geoning global population. Since the population iswhere necessary. growing fastest in developing countries, economi- cal as well as efficient technologies are needed toExpansion of distribution networks per year cater for these countries’ requirements. Decentral-Worldwide, current annual capital expenditure by ized water supply and wastewater treatmentutilities on water infrastructure is estimated at USD systems also play an important role here, since the90 billion, spending on wastewater infrastructure is provision of new infrastructure cannot keep paceestimated at USD 82 billion. Capital spending per with rapid urbanization.annum on water and wastewater infrastructure by2016 is projected to grow at a CAGR of 6.5 percent Nowadays a number of different techniques areand 5.6 percent, respectively. In the case of both 44 used for pipework construction and maintenance:drinking water and wastewater, more than half of These include laying pipes by excavation or usingthe investments will be directed to new water and trenchless technology, cement mortar linings, slip-wastewater networks and network rehabilitations. linings and long pipe relining. Particularly in built-Current capital investment of about USD 85 billion up areas, where most of the systems in need ofis directed to new water and wastewater networks, renovation are located, alternative pipelaying tech-and network rehabilitations. This amount is ex- nologies are in greater demand in order to minimizepected to reach more than USD 120 billion over the the disruption on the surface. New approaches arenext 6 years. In addition, current operating expen- also being developed for maintaining pipework. Inditures amount to USD 135 billion and USD 87 particular, these include monitoring and early detec-billion for water and wastewater, respectively. Pro- tion of damage using remote-controlled cameras. 44 GWI: Global Water Marketviders of services and equipment such as pipes, 2011, 2010.