Global Water Market Driven by Population, Complicated by European Debt

Wastewater Treatment Plant: Blagoevgrad, BulgariaThe continued global freshwater shortage should become more acute in the next few years, compounded by population growth, industrialization, and pollution. It is also leading to growth in the global water treatment market, according to newly released market research.

The global market is projected to reach US$26.6 billion by the year 2017, according to “Drinking and Wastewater Treatment Chemicals: A Global Strategic Business Report,” a global market analysis conducted by Global Industry Analysts, released in late April.

To meet the growing need for fresh water, water reuse, recycling, and desalination will be employed and will drive the market for water treatment products. “Developing countries are forecast to drive growth with China, India, and Brazil displaying robust demand potential for water treatment equipment, services and supplies including chemicals,” according to a summary of the report. “This is largely because per capita consumption of water in these countries is poised [to] escalate in sync with improvements in standard of living and the rapid pace of industrialization.”

European nations are struggling with water issues as well. According to the European Union, its member nations with the greatest water resource constraints are Cyprus, Belgium, Spain, Italy, and Malta. Conditions in Cyprus have been deemed severe as the nation has an unsustainable level of water use. The already low water supply conditions are exacerbated by increased tourism during the driest time of year, Oikos International states. Both Malta and Cyprus are supplementing their groundwater supplies with desalinated seawater. Cyprus alone generates 20 million cubic meters of reclaimed water per year that is used for irrigation.

Regulation, which differs nation to nation, is also contributing to increased use of water treatment products. “Governments worldwide are adopting stringent policies and regulations for promoting environmentally responsible behavior among industries and consumers. New regulations for sludge and wastewater treatment will spur demand for specialty chemicals,” according to the Global Industry Analysts report.

Those “specialty chemicals” are defined as those “high performance” chemicals that are less toxic and more environmentally friendly, but that are still extremely effective in water reuse or industrial purification applications, such as the ultrapure water treatment needed by the electronics and semiconductor industries. They are distinguished by the analysts as being a separate market from “high-volume commodity chemicals such as soda ash and aluminum sulfate.” They include industrial biocides, organic esters, corrosion inhibitors, coagulants, scale inhibitors, pH adjustors, and activated carbon.

The analysts point to another interesting market factor affecting the water industry, particularly in Europe: the European debt crisis. There is concern that continued problems associated with the Euro valuation could “result in industrial plant closures and low capacity utilization rates at customer manufacturing facilities, as a result of weak industrial and manufacturing activity.”

Even more telling is the other interrelated fiscal problems that promulgated the crisis. The analysts note that:

Interestingly, one of the reasons fingered for the widening debt levels of governments in Southern Europe is the flawed water financing strategies adopted till date. For instance, in Portugal, Italy, Greece & Spain, financing of the water infrastructure is majorly through EU grants and central and local government debts. Investments by private sector have been close to negligible thus resulting in heavy accrued public debts relating to water infrastructure. The austerity measures likely to be initiated to counter the crisis will likely limit the government’s investment and expenditure in the water sector, thus impacting new projects, the heat of which will be indirectly felt by the water treatment chemicals market.

Also, the European Union has legislated some of the toughest norms for drinking water quality and wastewater treatment and this provides regulations driven demand a tad higher insulation to the economic blues. […] Against a backdrop of a creaking water infrastructure that calls for dire upgradation measures, juxtaposed with dwindling funding resources, municipal water and wastewater budgets are not expected to change significantly, despite financial crisis.

Image by Klearchos Kapoutsis, used under its Creative Commons license.