Water is Big Business

The most widely used estimate of the size of the global water market over the last two years has been in the range of $360 billion, as shown in the chart below, with an annual growth rate of 4-5%, suggesting the market is currently in the range of $375 billion.

The most widely used estimate of the size of the global water market over the last two years has been in the range of $360 billion, as shown in the chart below, with an annual growth rate of 4-5%, suggesting the market is currently in the range of $375 billion. Within that amount, the key segments break down as follows:

50% of the total, or approximately $185 billion, is comprised of municipal utility services revenues an estimated 20-22%, or about $40 billion, is revenues from private sector utility operators while the remainder is provided by government entities, usually local municipal government, around the world. (While the private sector serves only an estimated 10-12% of the world’s population, their share of revenues are higher since they are charging full cost of service, rather than embedding it in the government cost base. This trend toward full-cost pricing of water is beginning to take hold in some municipal governments as well.) 26-27% , or $100 billion, comes from consulting, engineering, construction, operations and other services. 21-22%, or $80 billion, comes from the sale of equipment, technology, and treatment chemicals. 2-3%, or approximately $9 billion, is residential water treatment equipment.

Using these numbers, the size of the global private sector market available to investors would be about $229 billion, including private sector utility revenues, equipment, services, and the residential market.

A recent analysis by Global Water Intelligence, the leading industry journal, estimated a global market size of $316 billion, broken down as follows:

• $18 billion – industrial capital expenditure
• $13 billion – industrial operating expenditure
• $78 billion – utility capital expenditure
• $71 billion – utility operating expenditure, ex chemicals, energy, and labor
• $23 billion – utility chemicals/consumables
• $48 billion – utility energy expenditure
• $65 billion – utility labor expenditure

This estimate suggests that the global market is about $203 billion, excluding energy and labor expenditures. Though it’s looking at the market a little differently, this estimate is not terribly far off our estimate of $220 million, excluding the market for residential treatment equipment.

*Source: SNet Global Water Indexes