While the market may be segmented in many different ways, the global market for water is estimated at approximately $400 billion per year, with $100 billion spent annually in the United States. Globally, the municipal market represents about a $300 billion industry while the industrial segment represents about $100 billion. Within the U.S. market, municipal expenditures are split between the federal and state & local levels. For 2005, we estimate that total state and local expenditures for water infrastructure will be increase by about 10-12% Year over Year and will grow by a further 5-10% in 2006.
The water industry can be segmented in several ways, municipal (supplying consumers) vs. industrial (supplying mostly process industries); drinking water vs. wastewater. Within each of these segments the market can then be broken down into different sub-sectors, such as equipment vs. chemicals vs. engineering services, etc. Each sub-segment has its own unique issues and opportunities. For example, chemical usage is in decline, whereas the use of membranes is increasing. Additionally, as a result of the increasing use of pharmaceuticals by consumers, new analytical testing requirements are being developed.
Overall, the global industry is expected to grow somewhere around 8-10% with certain sectors growing faster than others. There is uncertainty about the exact growth rate. Although much of the spending required for water-related infrastructure projects has been identified, there are regulatory and local issues that must be overcome in order for spending to be committed, therefore making exact forecasting almost impossible.
WATER INDUSTRY TRENDS
The key trends in the U.S. water industry include:
Public awareness of the importance of water quality is growing. This is resulting in consumer groups pushing for cleaner water. Combined with the under-investment in prior decades in infrastructure, new regulatory controls and enforcement, spending has accelerated since 2000. Privatization and outsourcing of water utilities are growing slowly as a result of the high capital requirements, and the financial constraints of municipalities. The lack of significant increases in user fees means the sector may not be as attractive to potential investors as many had originally expected. Consolidation and ownership are changing on the supply side. Key assets are changing hands, and there is an increasing role of private equity investors in the industry. While the market is still fragmented, there is still uncertainty around its success in the long term.
Top 10 Trends in Water:
Water quality and quantity problems are growing. Public awareness and concerns about water issues are growing. Regulatory controls and enforcement are expanding. Huge capital expenditures are required to address these issues. There has been a "reinvention" of privatization-public-private partnerships. There is a continuing consolidation and rearrangement of ownership. In recent years there has been a more efficient use of water, and a greater reliance on recycling and reuse. The have been incremental, but inexorable advances made in water treatment technologies. There is growing consumer power. Water prices have been rising.
Some of the key companies in the water industry are: