Driving Water Markets

18 November 2010

CONTENTS 1 2 Water-The Blue Gold Water Scenario India 3 4 5 Market Development – Innovative Ways to drive the Market Finance Way Forward Page 2 Innovations in water .

is focusing on executing big water treatment projects. Warren Buffet Bought a water treatment L& T forayed into Water transmission & distribution systems. to the tune of Rs100 Crore IVRCL Infra & Projects Executed first water project ~1992 Water & Environmental projects contribute to 50% share in revenue ~2006 ~ INR 450 Crs Philips India launched Intelligent Water Purifier in 2007 Aquaguard continues to be the leader in drinking water category. like oil. Water. is finite. Industrial effluent treatment plants. provider. where the penetration of water purifiers is a mere 2. A clear signal that investing in water is an untapped Water treatment plants & opportunity.5 %.The Blue Gold Gammon Executed first water project in 2001 Hindustan Unilever launched Pureit in 2005 Wipro Wipro Ltd. Tata forayed into water business in Dec 2009 launching water purifier Tata Swach Page 3 . a division of the IT major Wipro. Waste water treatment and disposal.Water . which launched its venture in the water business in 2008 Wipro Water.

? ? ? ► Indian industries consumed about 50 billion cubic meters of water Water ScarcityIs a Crisis looming ahead? Population – Increasing Demand – Increasing Consumption-Increasing ► Large population still lacks access to safe drinking water Quality of water.Wasted ► Establishment of UMPPs will further strain the thin water resources Industry -Growing Water Reqd.Increasing Water Recycle.Poor Health IssueIncreasing India’s water future??? ► Fresh water available per capita per annum in India has dropped from 5.200 m3 to 1.820 m3 in 01 According to WHO. mortality is high due to water borne diseases Page 4 Innovations in water .Water Scenario-India Would the next world war would be over water ? Text Surface Water-Polluted Ground Water-Depleted Rainfall .

Need for Awareness : Changing Perceptions Potential investments driven away by perception of high Inadequate investment Operational inefficiency Funds lost to system: • Non-recovery • Corruption • Rents risk and low returns Inadequate maintenance Low fee revenues Low perception of value and low willingness to increase tax based water funding Infrastructure degradation Good quality human resources driven away by lack of opportunity and low achievement Low service quality Loss of positive externalities and increase of negative Externalities/ Page 5 Innovations in water .

Innovative Ways of Driving the Market Page 6 Innovations in water .Market Development .

would be charged extra as scarcity value to the water Page 7 Innovations in water .Virtual Water-International Water Trading Trade of product Global Water savings = Y-X Mm3/yr Virtual water content of product in Egypt = Y Mm3/yr Virtual water content of product in Australia= X Mm3/yr National Water savings (Egypt) = Y Mm3/yr National Water loss Australia = X Mm3/yr •Low mean rainfall •Low water resources •Low Fertile Land Availability •Dry climate and high rate of evaporation •Low yield of product •Better water management & planning •Climatic conditions more feasible •Higher yield of product •Better production infrastructure Countries which imports products containing virtual water from other countries.

Two mechanisms to supplement national actions International Water Trading (IWT) Water Reduction Mechanism To achieve real. Primary objective being reducing the consumption of water used Countries will reduce their aggregate water consumption by certain % below base year ► ► ► Process of buying and selling of water credits in international market. measurable & cost effective water reductions Page 8 Innovations in water . long term. But this time for Water ► An initiative for International Cooperation in the area of water use reduction and conservation.Another Protocol like Kyoto….

Chile.Water Entitlements-National Trading ► Water Entitlements Water Allocations Process of buying & selling of water access entitlements – Water rights. the activation started in 1980s after the cap on Murray-Darling Basin in Queensland Water trading rules fall under the Australian Water Act (2007) Under the National Water Initiative (NWI). In Australia. ► Trade ► ► Use ► Allows scarce water resources to be transferred to their most productive uses. Countries having water trading-Western states of the United States. Australia & Spain's Canary Islands. South Africa. water trade is the transfer of water access entitlements (permanent) and seasonal water allocations (temporary) between different entities Page 9 Innovations in water .

► ► ► Goal Setting Water Intensive Consumers shall be measured for Specific Water Consumption and target will be set for each Designated Consumer (DCs) Reduction Between certain time period. Developing market based mechanism for promoting implementation of DSM measures Perform Achieve & Trade (PAT) for Water. DSM measures should be the first considered and actively incorporated into water policies. DSM will lead to sustainable water systems and markets.Demand Side Management ► Water demand management implies actions that influence the quantity of water consumed by users. DCs shall Reduce their water consumption to meet targets Trading DCs exceeding targets shall be credited with WSCerts DCs failing to achieve targets shall either meet target by buying permits or pay penalties Page 10 Innovations in water .

The penalty mechanism on noncompliance may be introduced.Recycled Water Certificates -Promoting Recycling ► Recycled water usage obligations (in % of actual water consumption) can be introduced by water regulators according to consumption ( for above categories) Certain percentage of obligation can be obtained by purchasing Recycled Water Certificates. State regulators Recycled water usage obligations Penalty on noncompliance ► Industry Commercial Residential Agriculture ► State agency Recycled Water certificates Page 11 Innovations in water .

Finance Page 12 Innovations in water .

Innovations ► Development of Water Savings Companies (WSCos) concept for undertaking water efficiency projects Payment to WSCO End user’s savings Wáter Bill Before During the contract Water Bill After the contract (less than life span) Project Start-up Contract signed ► Transfer of the equipment property End of the contract Financing of projects based on loan securitization through water credits Page 13 Innovations in water .

Way Forward Page 14 Innovations in water .

Way Forward Way Forward National Trading Page 15 Innovations in water .

Page 16 Innovations in water . Sanitation Increase in Agribased industries Increase in Agricultural Production Increase in Industrial Production Increase Per capita Income Poverty Alleviation Increased demand for cash crops Increased demand for Industrial goods The lack of clean water and sanitation slows the world’s economic growth by $556 billion each year. Health Economic Growth Education.Water – Core For Sustainable Economy SUSTAINABILITY Eradicate poverty & hunger Achieve universal primary education Achieve eradication of HIV/AIDs malaria and other diseases Reduce child mortality Food Supply.

THANK YOU Page 17 Innovations in water .

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