Water Management Macro Trends (2)
Some macro trends in the water industry include increasing decentralization of water management in megacities, use of blockchain for secure and transparent asset transactions, growth of chatbots and AI for better customer servicing, government incentives for micro-hydropower projects, and growth of green bonds for developing sustainable and environmentally friendly water management techniques. The details about the macro trends in the water industry are presented below and in the attached spreadsheet.
Megacities & Mega Regions
- According to a recent report by the World Economic Forum (WEF), about 70% of the global population will be residing in cities by 2050. Additionally, more than 90% of the urbanization growth will be driven by emerging markets of Asia and Sub-Saharan Africa.
- By 2030, it is projected that over one billion people will be residing in about 100 very large cities. All the megacities will be plagued by similar water management issues, i.e., mismanagement of wastewater, drinking water, storm water, recycled water, among others.
- It is anticipated that urban water resources will encounter heightened stress and may struggle to meet the basic infrastructural needs of expanding populations. Further, about 19 of 29 megacities depend on a water supply that is generated by ground water evaporation.
- Decentralized water solutions, backed by Fourth Industrial Revolution technologies and business model innovations, may emerge as a powerful tool in infrastructure resiliency.
- It is noted that the use of decentralized water-reuse systems deployed on a larger scale could help megacities that are struggling with unreliable water supplies. Also, creating a syndicate to direct large-scale financing of decentralized water distribution can accelerate the deployment of solutions.
- Blockchains can bring disruption to the water management industry. The decentralized distribution of information can enable the exchange of assets without the need for intermediaries.
- Additionally, blockchains offer a secure and transparent method to access and record transactions between industry consumers, households, water managers, and policymakers.
- Blockchain technology can support water management by using smart-contracts for faster payment settlements, additional security for regulatory compliance, and peer-to-peer trading of water rights, enabling to share and utilize excess resources with others without relying on a centralized authority.
Virtual Agents and Chatbots
- According to IDC, about 45% of utility companies have invested in AI analytics. A chatbot is a form of AI technology that can converse with customers through an online messaging platform.
- Customer service has become imperative for success in today's world. In 2017, about 5.5 million customers in the UK switched their utility services provider due to service dissatisfaction.
- Chatbots use machine learning to enable them to become smarter with human interactions. It is equipped to scrap vast amounts of data, enabling quicker query resolution for customers round the clock (24x7).
Selling micro-generated energy
- The global market for small and micro hydropower is projected to grow from 169 GW in 2018 to 214 GW in 2026, registering a CAGR of 3.06%.
- Some factors contributing to the growth include increasing industrialization, government focus on generating clean energy, and ability to supply electricity in remote areas due to unavailability of grids.
- Governments of Switzerland, Indonesia, the UK, Georgia, India, Cambodia, Sri Lanka, among others are incentivising micro-hydropower projects with Feed in Tariffs (FIT) or net-metering, i.e., selling energy to national grid.
- Small and micro-hydropower can provide electricity to remote locations and contribute to decentralized mini-grids serving areas not connected with primary grids.
- In 2019, the progressive issuance of green bonds surpassed $200 billion, registering an increase of nearly $30 billion over 2018. Further, it is noted that just 9% of the total green bond issuance were related to water.
- Climate Bonds Initiative (CBI) introduced green bonds for water infrastructure in 2016. The first phase directed over $1.8 billion to develop climate-smart water infrastructure.
- Phase two investments will be directed for nature-based and hybrid water infrastructure projects, like water systems for wetlands, watersheds, forests, and agricultural systems.
- Green bonds are often oversubscribed, as the average green bond sold in the US is three times oversubscribed.