How water could imperil the growth of megacities

On Tuesday, Dow Water & Process released a white paper warning that the interdependency of water usage, energy consumption and the growth of cities would soon come to a head, thanks to enormous growth in the developing world.

To dig deeper, I called Snehal Desai, Dow Water’s global marketing director. What ensued was a lengthy discussion attempting to unravel the complexities of the water conservation issue, with a particular focus on why some of the countries with the least apparent moral concern for the environment — China, India and several nations in the Middle East — actually have the most at risk, economically, by not minding water consumption.

SP: What compelled Dow to put out this white paper? Why this, why now?

SD: We’ve been involved in the water treatment industry for several decades, from the very beginning of when these technologies were being used. We’ve been sort of in the background enabling technology but as we look forward, there are some bigger questions.

Water’s not a topic that lacks for people having opinions and points of view. We have to look at ways to use streams we’ve never used before.

There’s the connection between water and energy, and then the value we place on water in different parts of the world. How do we start a bigger broader discussion? At the end, it may be a combination of the way we treat things from a behavioral point of view as well as technology.

SP: So what are you seeing out there?

SD: What strikes me personally as I listen to the stories…there are two contexts.

One is from the point of view of cities and large municipalities. They have more people moving in using their infrastructure. These [forecasted] megacities [in developing nations] are the sources of where you’re going to drive your economic gains on the world stage. India, China — they’re investing in distribution and technology and touching on the behavioral part of what you can and can’t do. They’re treating it as a strategic asset. They’re taking action.

China’s 12/5 deal [Its 12th fifth-year plan. --Ed.] put some energy behind getting action to take place: real projects, real companies. The same goes for India, but maybe a little less dogmatic in trying to drive to the answer. There, the central government may not be able to get their arms around the whole problem but the middle class is taking the problem into their own hands.

You can get yourself all wound up around the policies, but there are portions that are moving ahead. If you’re an industrial company in the southwest [United States] like Intel you’re going to look at technologies and look at reuse. The dollars and cents are starting to rack up. It’s not about saying, OK someday the price of water will go up in five years and I’ll worry then. No, the price of water is going up today, and I’ll deal with it now. The industrial sector right now is sort of pinched — they don’t know how to price water appropriately and ag[riculture] is a huge water user — we see users get creative and aggressive in ways of using the most of what they have.

We’re looking at where the action is. And the action is happening honestly in many other places than here.

Are you going to solve it on a national basis? Probably not. On a regional basis? That’s probably a good plan of attack.

The Chinese megacities are saying if we want this to be a viable growing industrial megacenter, we’re going to have to deal with this. It’s amazing how people are taking control on their own.

SP: The industrialization issue is a prickly one. How do you make growing nations feel the pain of water scarcity without an actual price on water? Link it to energy?

SD: The amount of water that you need for energy is becoming a lot more transparent. If you’re sitting in China and saying I’ll put X number of coal plants in, well, you can’t do any of that without water. You know that, watching an industrial process, it has an enormous [water] footprint. Whatever you make requires water — some more, some less.

If you’re sitting in China and seeing the influx of people in cities from rural areas, it’s the enormous impact of it. The enormous shift in such as fast amount of time. You have no other option except to value this precious commodity. You can’t get your hands on it fast enough. You have to be aggressive in the way you do it. You have these vectors that come together and water is at the center of it, very cleanly: whether it’s more people or more things or what have you.

The Chinese government is talking about desalination plants. They haven’t done it yet, but they’ve tapped out their groundwater. They just can’t keep up.

You watch the behavioral side and see them applying pretty firm economic principles because it’s happening so fast. You just don’t see that in the U.S. and Europe; it’s coming over a period of time and we’re not necessarily changing the population drastically. We’re not feeling the pinch.

[Developing nations] want to get on in it. They want to join in on the progress but they want to do it all at once.

SP: Dow Water’s reach is global. Where do you see the low-hanging fruit?

SD: From a water perspective, we like other areas for the connection between energy and water. With all the talk around exploration around oil and gas…the older the well, the more they’re in the water business — and oh, by the way, they have to get oil or gas out of it. You need incredible amounts of energy to do so, and with that comes increasing pressure to deal with the water [issue]. We see a lot of momentum and focus in that area, around digging in oil fields. Enhanced oil recovery. It’s become an even sharper highlight in shale drilling for natural gas.

[Oil and gas companies are] getting charged more, or fundamentally being restricted on the front end, to get freshwater in. That’s not any particular part of the world — we’re seeing strong [industrial water reuse] activity in the U.S., good activity in Latin America. In China, they’ll go after every bit they can get their hands on. Even Africa. They’re dealing with these problems. They have to be better at managing the water they have, the wells they have.

There are two other geographies with good activity. One is Latin and South America — Brazil and Mexico. In the former, the municipal water system needs to exist, then improve. They are still building fundamental infrastructure down there. But the Olympics and World Cup are helping with a huge push to upgrade. The core of that is water infrastructure.

The other area is Southeast Asia: Thailand, China. They’re surrounded by water but that doesn’t mean they have the drinking water they need.

If you look at the way cellphones were brought to bear in India and China, they skipped landlines and went straight to mobile. With water, you’re looking at small communities taking care of their own water needs — which they can — or putting water devices in the home, once a luxury in a place like the United States. A huge impact on the quality of life.

SP: Let’s return to oil and gas drilling for a moment. Water restrictions seem to be driving conservation.

SD: The drivers are similar to what we see elsewhere. They’re not breaking new ground in terms of technology they’re using, but if it’s better for them to use that flowback water economically — reuse the water and inject the next hole — I’m going to do it. Math works.

How does it develop? It starts with the cost of access to that initial slug of water — from an aquifer, river, whatever. Does it cost me to discharge [water elsewhere]? The cost of inflow may not be terrible, but the discharge is horrific. Or both are horrific.

The amount of water you need to frack this well, it’s a one-time use — it’s not continuous use. Speaking to a couple of companies in this space, they say it’s in our best interest to capture that flowback water and treatment. It’s our water, and we don’t have to get in the business of sourcing. With the Marcellus Shale, they were recovering 95 percent of that initial water. Of course, most people are concerned with that other five percent, and contaminants in it, and what happens with it.

More companies are being brought in to treat the water that comes up [from the wells]. You don’t typically deploy that technology unless you’re going to reuse a large percentage of that water.

In some uses, you have people that are very comfortable with pricing water the way it should be. Where we’re not ready to tackling that issue is community water, or agriculture — it’s a different conversation. You don’t want to touch that third rail.

SP: Natural gas drilling is picking up here in the U.S. Is there, then, a business opportunity for Dow in this space?

SD: This one opportunity is interesting to us because we know our technologies have a place there. Whether it’s ion exchange technology or reverse osmosis or filtration, we know that the technology in our suite is easily applied today. We expect to see reasonable returns in those market segments.

That said, we know that there are some application areas that need to be sorted out. The need is true must be balanced against way too much expansion in places where people live. There will be equilibrium in the Northeast and down around Texas and Arkansas. That’ll settle and give us a better sense of what the true business sense is. I’m bullish on it, but I’m also bullish on residential water treatment in India. Or a greater push to use cleaner water in the food industry.

And we haven’t even talked about wastewater. There is water, minerals and even energy in the water running down the street; in that sludge.

For us, the most ready market is tapping into that growing demographic sector and that developing economy.

SP: You’ve intrigued me with that comment about urban water. When will major American cities begin tapping wastewater for energy?

SD: It’s still early days but you can see down the road that if you can crack that nut. We know there’s value in this waste treatment facility and we can liberate energy from that and make that unit self-sustaining and maybe surplus.

It actually could be a source of revenue for that municipality. It might change the way you think about investing in infrastructure projects.

That’s not a U.S. phenomenon; that’s a global phenomenon. You’re tapping into an energy source that’s just there. And we’re not tackling it with the same kind of vigor that we’re tapping alternate energy sources.

Right now it’s in the exploration stage. Private company A with tech partners B, C and D can come together to solve the problem.

SP: When will I see a city like New York adopt such a measure?

SD: I don’t think anybody’s ready to tackle New York City yet, but you’ll start to see experiments in a city of 200,000 or 500,000 people and put in a model installation. There are some places in the world, maybe not on the energy piece yet, but definitely looking at self-serving infrastructure.

Singapore has become the state-of-the-art in a place that’s strapped for water resources. Their populous is pretty demanding and large and wants to attract industry. Their water utility has been a model in how they embrace technology.

A lot of companies are going there to incubate and test their technology. Those words — “waste-to-value” or “waste-to-energy” — if pitched properly, it’s on the basis of economics. It’s not just because it’s a good thing, but there’s money in getting this right.