Engineering Inc. - May/June 2010 - (Page 5)

BY J O E SA L I M A N D O MarketWatch long payback periods and low rates of return have led many investors to perceive a weak environment for private-sector participation in water and sanitation infrastructure. Investor interest, however, may have evinced itself in at least one place in 2009, going by the nearly 47 percent appreciation of the PowerShares Water Resources fund (traded on the New York Stock Exchange). The fund had $1.25 billion in net assets as of midMarch. Figure 1 Needed: Private Investment in Global Water Infrastructure A cross the globe, water—the most abundant natural resource—is becoming a hot commodity. Though water consumes nearly 70 percent of the Earth’s surface, researchers say nearly 1 billion people still lack access to the kind of clean, safe water necessary to sustain life. The effects of global warming, coupled with a soaring population, are motivating firms and investors alike to take a closer look at new opportunities in water infrastructure and, thus, increasing opportunities for engineers. Just how much opportunity is out there? A recent report from the Organization for Economic Co-operation and Development (OECD) recommended doubling the annual worldwide investment in water infrastructure development from $15 billion to $30 billion, a move that would no doubt increase the amount of clean water available to disadvantaged populations. Despite the need, however, new investments aren’t exactly flooding in—yet. According to OECD’s recently released Private Sector Participation in Water Infrastructure: OECD Checklist for Public Action report, high capital intensity, large initial outlays, World Water Use by Sector, 2000–50 7,000 6,000 5,000 Manufacturing Water Use (km3) 4,000 Electricity Domestic 3,000 2,000 Agriculture 1,000 0 Not Getting Better At least one fact is indisputable: The planet’s supply of fresh water will continue to diminish in coming years. Consider: • World population is projected to grow from 6.5 billion to 9 billion by 2050. New residents will need water to survive. • Upward mobility in China, India and elsewhere is moving millions out of poverty and into an economic class with an increased appetite for animal protein, hence a need to grow more grain and additional supplies of clean water. Without a significant infusion of funds, investment firm Credit Suisse estimates that “by 2020, more than 37 percent of the global population will face severe water stress.” 2000 2005 2010 2015 2020 2025 Years 2030 2035 2040 2045 2050 Source: OECD Environmental Outlook Baseline Figure 2 U.S. Water Supply Construction (dollars in millions) 25,000 20,000 15,000 10,000 5,000 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Years 2012 2013 Source: FMI Corp. 1999– 08 are actual numbers, 2009 an estimate; 2010–13 are forecasts. From Construction Outlook, Q4 2009. California Aqueduct and the E-Side Canal Raise the Price? How might supplies be augmented (and better distributed)? OECD suggested recently that, for developed nations, increasing the price of water might work. Figure 1 provides OECD projections to 2050 for water use by sector, illustrating huge increases in domestic, electrical, agricultural and manufacturing uses. Figure 2 illustrates projected increases in water supply construction through 2013. With numbers such as these, water represents a rising tide of opportunity that will be hard for firms to ignore. Joe Salimando writes on construction at www.electrical construction.com. Reach him at ecdotcom@gmail.com. MAY / JUNE 2010 ENGINEERING INC. 5 http://www.electricalconstruction.com http://www.electricalconstruction.com

Table of Contents for the Digital Edition of Engineering Inc. - May/June 2010

Engineering Inc. - May/June 2010
Contents
From ACEC to You
News & Notes
Market Watch
Legislative Action
Noble Causes
2010 Engineering Excellence Awards
Engineering America’s Recovery: Highlights from 2010 Annual Convention
Members in the News
Business Insights

Engineering Inc. - May/June 2010