Re-imagining water as the ground zero sustainability challenge
Water should be considered the “ground zero” for sustainable investing as it uniquely addresses all 17 UN SDGs. With global shortages of freshwater, compounded by mushrooming water contamination and related health issues, the water sector needs to follow a completely new regulatory, financial and technological path.
Similar to the prior experience of the energy sector, water will need to shift from the conventional model to unconventional technologies that emphasize conservation; distributed closed-loop systems, reuse and zero liquid discharge (the ability to practically eliminate wastewater by extracting nearly all of the freshwater and separating out the valuable minerals and compounds) all while using much less energy.
An unsustainable path, critical juncture
McKinsey projects a 40% freshwater supply deficit by 2030. The emerging deficit is evidenced in thousands of dry lakes and rivers that no longer reach the ocean. Less apparent – but more telling - is an accelerating drawdown of over 60% of global underground aquifers. This unsustainable “borrowing of water” began when above-ground rivers and lakes diminished, leading to a rush-to-drill globally. As a result, freshwater from these wells increased 34% of supply vs. less than 10% in the 1970s. Predictably, the most dramatic aquifer drawdowns coincide with the world’s largest populations, GDP and agricultural zones. As Ben Franklin said, “when the well runs dry, we’ll know the worth of water”.
Water Sustainability (Consumption/Withdrawals vs. Natural Replenishment)
Compounding this, an ever increasing proportion of freshwater is polluted, and the natural renewability of rainfall is undermined when it falls on contaminated soil, lakes, rivers and aquifers, removing it from usable supply. The historic water model assumed a “dilution solution” as toxins are absorbed in the earth’s vast lands, waters and oceans. However, some of the most toxic man-made chemicals (such as PFAS and PFOS, both highly carcinogenic) are called “forever chemicals” because they never degrade, but (like plastics) accumulate over time. In addition, there are about 2,000 new chemicals being invented annually (Note: the US EPA regulates 94, mostly unchanged in the past decades, and testing is spotty, revealing multiple violations). Current sewage plants were never designed to address the vast majority of these new, much smaller pharmaceuticals, hormones, cosmetics and disinfectant molecules.
Some of the most toxic man-made chemicals (such as PFAS and PFOS, both highly carcinogenic) are called “forever chemicals” because they never degrade, but (like plastics) accumulate over time.
The lack of safe water is already leading to dramatic increases in all ESG challenges: including rising healthcare costs and deaths from water contamination, disease and malnutrition (nearly always reflecting insufficient water supply). Freshwater scarcity has become the #1 cause of “environmental fatalities”.
Deaths from environmental causes (including malnutrition)
Thematic goals of unconventional water technology
Water sector investment needs are expected to grow at 2–3x global GDP, but these investments cannot follow the prior “conventional model” given its assumption of distributing natural resources (tapped out), dramatically increasing the environmental and healthcare costs. Rather, new “unconventional” technologies will need to emphasize:
- Recapture and reuse - with no ability to “increase rainfall”, reuse is the most scalable means to generate new freshwater. We also believe that reuse will synergistically allow for increased “water mining” in recovering and recycling vast sums of energy, materials, chemicals.
Wastewater includes extraordinary resources once recaptured and separated from pure water; for example, global wastewater contains:
- sufficient energy from methane to power all of the households in the US and Mexico
- enough potassium and nitrogen to meet 13.4% of the world’s agricultural demand
- Less energy intensity - Conventional water supply is seeing a dramatic increase in energy intensity, as ever deeper wells have a non-linear pumping cost, and longer aqueducts require more energy vs. higher evaporation.
Unfortunately, most unconventional means of water supply (such as desalination, ultrafiltration and atmospheric water generation) require many multiples of energy footprint vs. conventional technology. - Less toxins - Many water treatments are laden with chemicals to disinfect/purify (such as chlorine), meet industrial needs (such as loosening fracking oils), and fertilize crops. These additives lead to vast environmental degradation of soils, freshwater and oceans.
Example: Water supply / reuse
Desalination supply
Israel at 55% vs. United States at <3%
Reuse
Israel at 90% vs. United States at <0.3%
Disruptive new technologies
The following technologies address these three goals, with much lower costs and/or huge environmental benefits.
Reverse and Forward Osmosis
Conventional reverse osmosis (“RO”) is commonly used for desalination and water purification and should continue to see rapid growth. Desalination is mostly relevant for coastal communities given the cost of transporting water inland, but we expect to see strong growth in inland desalination as various technologies help to reduce the extraordinary volumes of “brine concentrate” (i.e., the salty slurry left over after desalination, which is generally put back in the ocean for seawater RO’s, but is costly and difficult to dispose of inland.
In addition, RO but is expensive and uses vast sums of energy. By contrast, forward osmosis (“FO”) is based on creating differentials in osmotic pressure that naturally pulls freshwater and/or other desired molecules through an advanced membrane. Although this technology has been used for over 30 years, it has been slow to compete in a world that was less concerned about energy consumption, CO2 or resource recycling.
However, significant advances in membrane technology and processes can reduce energy consumption by over 90%, while enabling more freshwater capture, and the ability to purify much more difficult/contaminated wastewater streams compared to RO. Fluid Technology Solutions is a leader in advanced membrane technologies and is addressing many new ZLD markets with extraordinary cost reductions and a much lesser environmental footprint.
Water sector investment needs are expected to grow at 2–3x global GDP, but these investments cannot follow the prior “conventional model”.
Natural evaporation
Evaporation is nature’s way of cleaning and recycling water. Currently, there are many industries that dispose of wastewater by injecting it underground (known to cause earthquakes and contaminate underground freshwater aquifers); dumping it into rivers, lakes or on land (increasingly illegal in developed markets); or evaporating the water in man-made ponds or tailings dams (huge land footprint, leaks, and overflows).
ECOVAP, Inc. owns an “evaporation matrix” technology, allowing wastewater to be poured over towers of specially designed recycled plastic that is treated to have the water ‘stick’ to its millions of square inches of surface space. The exponential increase in water surface-to-air evaporates at >59x the normal rate while using very little energy, and no chemicals or additives.
Atmospheric Water Generation (“AWG”)
There are at least 70 companies that make condensing-distillers that extract water from the air. Eventually, this technology could follow a trend similar to “roof-top solar” in providing distributed water to end-consumers. However, current AWGs are mostly limited to off-grid markets as they are highly energy intensive and work better in humid markets where water is likely plentiful.
Regardless, there are several new AWG technologies with game-changing technologies. Water Harvest is developing metal organic frameworks to “grab and release” water molecules from the air, even in highly arid environments, using a small fraction of the energy of conventional AWGs.
Modern Irrigation / Big Data
The most prolific agricultural basins in the world generally depend on depleting aquifers for water, mostly using the same flood irrigation that has been common since the beginning of civilization. In addition, these grain-belts use tons of herbicides, pesticides and fertilizers which are contaminating the rivers (such as the US’ Mississippi) and oceans, leading to vast “dead zones” and coral reef destruction.
Out of necessity, global agribusiness will need to generate more “crops-per-drop”, including a host of new environmentally-friendly technologies: remote-monitored drip irrigation using satellites, drones and sensors to automatically optimize plant-by-plant water use, biological/microbe technologies and processes to regenerate soil, and more local/distributed and organic farming, to name a few.
New Technology for Conventional Infrastructure
We generally favor investment in unconventional and smaller scale closed-loop/distributed water technologies vs. repairs and upgrades of the current conventional water system that is characterized by millions of miles of dilapidated distribution pipes.
Most of this infrastructure is older than its intended engineering design, leading to increasing leaks (usually 20-40%) and breaks. However, similar to the electricity grid, this “base-load” water capacity will need to be maintained, with a catch-up in nearly a trillion dollars in deferred capex. Fortunately, there are many new technologies to reduce leakages, breaks, rust-contamination and aqueduct/dam evaporation.
Trenchless pipes allow for retrofitting leaky, rusty, dilapidated pipes without digging up and replacing the old pipes (think of a heart “stint”). There are many new leak detection devices that scan both large pipe systems and that can detect small leaks with “last foot” pipes and residential appliances.
Clearly, addressing water shortages begins with conserving the water we use, and reducing leakages.
