Last week I put out the idea that we were approaching a tipping point in water re-use. There were a few other headlines this week which support that. For one thing California’s second largest reservoir is now ‘at its lowest level in 30 years’. Last Monday the California Department of Water Resources Director, Lester Snow, stated that next year “could be the worst drought in California history”. Governor Arnold Schwarzenegger and U.S. Senator Dianne Feinstein have proposed a $9.3 billion plan to the Legislature to fund a number of measures aimed at improving California’s water system.

So that’s California, – which bear in mind would be the 7th largest economy in the world if it was a country and has been the number one food producer in the United States for more than 50 years. Now let’s take a look at what’s happening in the capital of the world’s second largest economy. In Beijing, in the run up to the 2008 Olympic Games, Siemens Water Technologies has started up a wastewater reuse system at the city’s Beixiaohe wastewater treatment plant. The goal is to process 90% of the wastewater with 50% of the treated wastewater being recycled and reused.

2008 may be remembered as the year in which China hosted the Olympic Games but is also an auspicious year for another reason. 2008 is the first year in which the population of the planet will be more urban than rural. (Apparently this change occurred May 23rd 2008!). That’s an important turning point and if we are to increasingly live in cities, this of course means that we need to have means of sustainably meeting demands on water use in these cities.

Al Gores’ challenge to the US to move towards 100% non fossil fuel energy by the end of the decade, may be a long shot, but at least in theory it is achievable. There are alternatives to fossil fuels. The same can’t be said of water. There is an elasticity in water use, – up to a point, but there comes a point where you can not reduce water use any further without seriously impacting our ability to live. Mark Twain put it well when he said ‘Whiskey’s for drinking and water’s for fighting over’. Whether or not we end up fighting over it, history has shown that times of crisis leads to accelerated technological innovation.

This technological innovation is likely to take place in small start-up companies. Commenting on this in his article Inventing Water’s Future, William Pentland, noted that in purchasing Zenon Membranes for $700M, GE is effectively outsourcing their innovation in clean technology to small start-ups.

Some venture capital firms, like Toronto’s XPV Capital have placed big bets on this and are choosing to invest in innovative water start ups on the assumption that they will be future targets for ‘Big Water’ industry giants like GE Veolia, Siemens etc as scarcity, climate change and energy prices increase the value of water. In fact overall the amount of money invested in water and wastewater technologies in the U.S. rose 436% between 2006 and 2007, according to the Cleantech Group.

A good general yard stick to track the water business is the ISE Water Index (HHO). This index tracks a bundle of 36 companies engaged in water distribution, water filtration, flow technology and other water solutions. The ISE Water Index has enjoyed an impressive rally this year, has tacked on nearly 5% since the start of 2008, which compares favorably with the S&P 500 Index’s (SPX) loss of 7.7% during the same time frame. In fact, the index has climbed steadily higher since it was created in January 2006, gaining more than 36% along the way. As was outlined in Jocelyn Drakes ‘Cross Currents In Water World’ article.

Finally to close, one technology I came across this week which I thought was really ingenious and also just a lovely idea is called Play Pumps. It’s basically a children’s merry-go-round that pumps clean, safe drinking water from a deep borehole every time the children start to spin. So the system utilizes the energy of children playing, to purify water. Genius. You can check out a video of it in use in Africa on You Tube.