Water, as far as many Canadian businesses are concerned, might as well be liquid gold. Already a world leader in water management technology, Canada is extremely well-positioned to profit from the fast-approaching global boom in water-related spending.
“There is a huge lack of water around the world and there is a growing population as well, so with those two going in opposite directions [water management] is going to be one of the most valuable markets in the world,” said Richard Verreault, chief executive of GLV Inc.
The Montreal-based public company was once focused on three sectors: mining, pulp/ paper and water. It sold the mining group a few years ago to a Danish company to focus on pulp and paper and water “with water taking the priority” Mr. Verreault said.
“Water now makes up 70% of our revenues,” he said.
With total earnings for its 2010 fiscal year slightly exceeding $500-million, that makes for about $350-million in annual water-related revenues.
While much of that revenue comes from the company’s operations in Europe and the United States, GLV is beginning to find such emerging markets as China and Southeast Asia increasingly attractive.
The company already has about 100 staff based in China and its operations in Singapore generate nearly as much income as its Canadian activities.
The reason Canada has found itself at the forefront of such a rapidly expanding market is partially, though not entirely, due to holding 9% of the world’s renewable water supply.
“The fact that we have a lot of water and we have industries that are very water dependent is what drives the necessity for Canada to be strong in this area,” said David Henderson, managing director of specialized water investment firm XPV Capital Corp.
Such sectors as oil and gas are heavily dependent on what Mr. Henderson calls “mission-critical” water refinement processes that demand maximum efficiency, which he believes was the original motivation for Canadian firms to innovate.
“[As a result of regulations,] a lot of R&D and money got spent to determine how we filter and deal with contaminants and wastewater and that is the other side of [Canada’s] water foundation,” Mr. Henderson said.
That past experience has created an environment for companies like BioteQ Environmental Technologies Inc. to thrive.
The Vancouver-based producer of industrial water treatment technology generated $7.2-million during the first nine months of 2010, nearly a 50% increase from the $4.4-million the company generated during the same period last year.
Like GLV, BioteQ is beginning to focus its attention on emerging markets.
China, Mexico and Chile are of particular interest, said Tanja McQueen, BioteQ’s vice-president of corporate development.
However, Canada is not without competition in the water world.
Mr. Henderson points to countries such as Singapore and Israel, which have also encouraged significant water innovation, largely due to the relative scarcity of water in those regions.
By 2015, Singapore’s water sector will add US$1.7-billion to its gross domestic product.
Israel is expected to export US$2.5-billion worth of water technology products in 2011, according to an estimate by California-based research and consulting firm the Cleantech Group.
To ensure Canada maintains a healthy lead in water technology, XPV just raised an institutional investment fund to support Canadian businesses in the sector.
Mr. Henderson believes his company’s ability to raise such capital “in the worst fundraising market in a long time … is a good indication that the sector is moving from the fringe to the mainstream.
“It is going to be a very exciting time to be in the water sector for the next couple decades,” he said. “There is going to be lots of opportunity to export to [various] countries and solve some big challenges.”
BY THE NUMBERS
US$400 Value of worldwide water industry today in billions. (Projected to reach US$1-trillion by 2020.)
2 of 3 Proportion of all countries expected to be “water-stressed” by 2025.
40% Expected global increase in water usage by 2020.
283% Expected increase from 2005 levels in water demand in sub-Saharan Africa by 2030.
US$22.6 Global water infrastructure spending expected between 2005 and 2030 in trillions. (62% of that will be spent in South America, Asia and Latin America.)
Source: Innovolve Group Inc.