Paper predicts long-term growth in US water sector

The US water and wastewater sector will decline in 2009, as capital expenditure on infrastructure projects is cut back by 12.9 per cent, according to a new report: 'Water Market USA'.

Restraints on borrowing, shrinking tax bases and a drop in capital contributions from property developers have derailed investment plans.

But the report, published by Global Water Intelligence, predicts strong growth in the long term, as a result of scarcity, the need for environmental protection and to repair decaying networks.

Water Market USA suggests capital expenditure will grow from USD25.2bn (GBP17.7bn) in 2009 to USD49.7bn in 2016.

The biggest area of expenditure will be rehabilitating the sewer network, which will attract a total of USD46bn of expenditure between 2009 and 2016.

Upgrading wastewater treatment plants is also a priority - attracting USD41.1bn over the same period.

The fastest-growing market will be seawater desalination, which is currently not much more than a cottage industry in the US, attracting total capital expenditure of about USD130m in 2008.

This will grow to more than USD1bn by 2015.

The report also uncovered many other findings.

For example, water tariffs will need to rise steeply: currently US consumers pay between a third and a half of the amount European consumers pay for water, but they use two-to-three times the amount.

The challenge of recruiting skilled staff will drive investment in automation among larger utilities and will encourage outsourcing among smaller utilities.

The fastest-growing water technology markets over the period between 2008 and 2016 will be ultrafiltration and microfiltration membranes (which will grow by 280 per cent), UV disinfection (which will grow by 227 per cent), ozone disinfection systems (which will grow by 233 per cent), membrane bioreactors (which will grow by 180 per cent), and reverse osmosis membrane systems (which will grow by 165 per cent).

Capital expenditure on water reuse will top USD10bn between 2009 and 2016, whereas seawater desalination will attract investments worth USD5.5bn over the same period.

The main beneficiaries of long term growth in the sector will be engineering firms such as Black and Veatch, CH2M Hill, AECOM Technologies and Jacobs Engineering; solutions providers such as General Electric, Siemens, Veolia Environnement; and equipment suppliers such as ITT, Dow Chemical Company and Energy Recovery.

The growth rate of investor-owned utilities is expected to be more modest, although they are expected to provide a safe haven for investors during the crunch period.

Water Market USA is published in the form of 10 data sets and a DVD business documentary featuring leading figures from the industry.

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