Europac Work Sample

October 10, 2012
Water
HOW MUCH WOULD YOU PAY FOR
AN OUNCE OF BLUE GOLD?
■ How thirsty cities, farms, power utilities and resource companies can find more water
■ Water prices rising faster than electricity
■ Managing “Water Risk” to stay in business and outperform
■ Canada, a breeding ground for world-class water technology companies
Sabrina P. Tsai
BSc Environmental Science
416.479.8976
sabrina.tsai@europac.ca
www.europac.ca
Euro Pacific Canada is an IIROC registered brokerage headquartered in Toronto, with offices in Montreal
and Vancouver, specializing in foreign markets, precious and strategic metals investing. The firm offers
an integrated platform of investment banking, institutional sales and trading, research, and private client
services following the advice laid out by Euro Pacific Capital’s Chief Global Strategist Peter Schiff, an
internationally recognized market strategist. Additional information is available at www.europac.ca.
THE EURO PACIFIC ADVANTAGE Toronto

The Euro Pacific Advantage: Despite the growing relative size and importance 130 King Street West
of non-North American capital markets, most domestic brokerage firms Exchange Tower, Suite 2820
continue to offer clients scant exposure to foreign securities. Worse yet, access Box 20, Toronto ON, M5X 1A9
is typically limited to trading through ADR stocks or via over the counter with 416-649-4273
US based market makers. 888-216-9779
Informed by the hard money ideals so clearly and consistently articulated by Montreal
Peter Schiff, Euro Pacific Canada looks to prepare investors for a future in which 1501 Mc Gill College Avenue
North American financial leadership is likely to wane. As the developed world Suite 1450
continues to be mired in debt, we see promising opportunities in developing Montréal, QC, H3A 3M8
markets. We have a particular focus on value based and commodity-focused
investments and concentrate on those countries that show greater respect for Vancouver
economic fundamentals such as savings, production, and monetary discipline. One Bentall Centre,
It is precisely these differences in outlook that make Euro Pacific so unique. 505 Burrard Street, Suite 710
Box 76, Vancouver BC, V7X 1M4
www.europac.ca
As a full-service broker/dealer, we are constantly expanding our offerings to allow

clients access to global markets that adhere to their personal investment goals. In
addition to foreign stocks, we also offer foreign bonds, mutual funds, and precious
metal investment strategies. For accredited investors, we offer private placements.
If you are concerned about the future of the North American economy, Euro Pacific
Canada may be the only domestic brokerage firm that speaks your language.
October 2012 Water Investment Report
Investment Summary
Investors follow the prices of gold and oil closely. Yet the price of life’s most precious resource of all – water – is seldom
talked about. Water seems abundant but none can be directly consumed without water treatment and none can reach
where it is needed without infrastructure. Competition for water between agriculture, urban centres and industries is
the most intense in history. Increasing water demand, water pollution and deterioration in water infrastructure have
caused water prices to rise faster than electricity. Agriculture, resources extraction, power utilities and manufacturers
need to manage “Water Risk” to ensure the long-term viability of their enterprise. Not to forget, water is also shared with
the other 8.7M species on the planet. Water has become the most undervalued resource in ways both obvious and
subtle. The world water market is currently valued at US$400B and projected to reach $1T by 2020. Canadian water
technology success stories like Trojan Technologies and ZENON Environmental, both commercialized their technologies
around the world, have made Canada a breeding ground for world-class water technology companies. With investment
opportunities in water conservation, remediation, desalination and infrastructures adapted for climate change, water
has become the most urgent and profound investment of our lifetime.
Infrastructure Replacement and Expansion

Water infrastructure investments are projected to outpace investments in other types of infrastructure, including
power. Aging infrastructure, distribution network expansion, coupled with a prolonged period of under-investment
in water infrastructure call out for investment in water infrastructure in order to keep up with demand. At the same
time, the increasing cost of supplying water has put tremendous upward pressure on water prices.
Water Conservation
The most cost-effective source of new water is water conservation. New water from water conservation costs about
one-quarter the cost of new treatment plants, pipes and pumps. For every $1.00 spent in communities with leak
detection programs, up to $3.00 can be saved (Environment Canada). Investment opportunities exist in agriculture,
power generation, water recycling, smart meters and leak detection.
Water Treatment
Industries are required to implement technologies that will meet increasingly stringent environmental standards. Advanced
treatment technologies are being developed to remove traces of pharmaceuticals and new formulations of chemicals for
the production of ultra-pure water or the recycling of wastewater. The future of water treatment is likely to move away from
centralized treatment where water is piped to massive water treatment plants to localized or distributed treatment, where
water treatment takes place on-site.
Desalination
Seawater desalination is expected to meet increasing water demand in Saudi Arabia, China, U.A.E. and U.S.A.
Decreasing cost of membranes used in desalination by reverse osmosis has cut down the cost of desalination by
50% over the last 30 years. Opportunities exist in membrane technologies and water-energy co-generation plants.
Climate Change
Climate change is expected to intensify droughts and floods. Green infrastructure is an integral part in adaptation to
climate change. Green infrastructure mimics natural landscapes using trees, vegetation, wetlands and engineering
systems to filter water, retain storm water and restore the hydrological cycle. Examples of green infrastructure are green
roofs, permeable pavements and rain gardens.
www.europac.ca 1
Table of Contents
How Much Water Is There? 3
Cross Country Comparison 4
Global Macro - Water and Climate Change 6
Adapting to Climate Change to Avoid Costly Natural Disasters 7
Canada’s Water Use by Sector 8
Declining Water Yield in Canada 10
Agricultural Water Use 11
• Water shortage drives up food prices 11
• Ethanol: Water for food or fuel? 12
• Water for crops or showers? Competition from urban development 13
• Rising sea level increases salinity in low-lying farms 13
• Farm runoff pollutes waterways 13
• Drinking water pollution 13
• Investment opportunities in agriculture 14
Industrial Water Use 15
Water in Energy 15
• Water consumption in power generation – energy and water interdependence 15
• Water consumption in fuel production – cars won’t run without water 17
• Warm water shut down nuclear plant 17
• Future power generation constrained by water availability and quality 18
• Investment opportunities in energy 19
Domestic Water Use 20
• Water is not free – Canada’s municipal water infrastructure deficit 20
• The mystery of water pricing 20
• Water prices rising faster than electricity prices 21
• Canada’s water prices among lowest in the world 22
• Water rights and water trading 23
• Centuries old struggle over water rights 23
• Diverting water from the Great Lakes: not an easy task 24
• Water privatization controversy 24
• Blurring the line between water and wastewater 25
• Global Water and Wastewater Treatment Market 25
• Drinking Water Treatment Process 25
• Wastewater Treatment Process 27
• Water Treatment Technology Types 29
• Investment Opportunities 32
Other Industrial Water Use 34
• Pulp and paper water use 34
• Oil and gas extraction water use 34
• Mineral extraction water use 36
• Food and beverage water use 38
• Textile industry: the case against cotton 38
• Investment opportunities in resource extraction and manufacturing 39
Desalination 40
• Cost 40
• Desalination not a magic bullet – the water and energy nexus 41
• Investment opportunities 42
Transportation Water Use 43
Investing in Water in Canada 43
Aqua Pure Ventures 45 Bioteq Environmental Technologies Inc. 45

Clear ford Industries 46 GLV Inc. 46
Global Water Resources 47 H2O Innovation Inc. 47
Logistec Corp. 48 Naturally Advanced Technologies 48
Newalta Corp. 49 Pure Technologies Inc. 49
Ridgeline Energy Services 50 Seair Inc. 50
2 www.europac.ca
Water: How Much Is There?

More than 97% of world’s water is seawater. Less than 3% of the world’s water is fresh and out of that
3%, 2.5% is frozen in polar ice sheets and glaciers and not readily available for use (Figure 1). Only
0.5% of water is part of the hydrological cycle that contributes to weather conditions and sits in lakes
and aquafiers (Figure 2).
Figure 1. Available Water

Source: “Facts and Trends” World Business Council for Sustainable Development, 2009
Figure 2. The Hydrological Cycle

Source: Water Facts and Trends, WBCSD, 2009
www.europac.ca 3
Cross Country Comparison
Water powers every facet of life, from drinking to farming to electricity generating. Globally, ag-
riculture dominates the use of water at 67% of all water use, followed by household (domestic)
use of water at 9%. However the figures vary dramatically across countries according to the
abundance of water in each country. For example, Canada is fortunate to have an abundant
renewable resource of water, ranking among the top 3 countries in the world along with Russia
and Brazil. This abundant supply of water from glaciers and lakes allows allocation of water for
electricity generation from hydroelectric dams. It is estimated that 60% of water in Canada is al-
located to power generation and only 8% is allocated to agriculture. Contrast this with Australia,
a relatively arid country, which generates three-quarters of its electricity from coal. Due to the
scarcity of water in Australia, 67% of water is allocated to agriculture and only 7% is used for
electricity generation, mainly in the form of condenser and reactor cooling. As a country experi-
ences industrialization and higher income, proportionally more water is allocated from farming
to power generation and manufacturing (Figure 3).
Figure 3. Water Uses for Main Income Groups of Countries

Source: Water for People, Water for Life, UNESCO, 2003
Asia accounts for the highest total volume withdrawn and consumed but North America accounts
for the highest water consumption and withdrawal per capita. The average person living in the
United States or Canada uses up to seven times as much water than the average person resid-
ing in China (Figure 4 and 5). In terms of relative water scarcity, China, India, Mexico, the
Middle East, most of Africa and the United States are considered water-poor countries, when
adjusted for population (Figure 6).
4 www.europac.ca
Figure 4. Global Water Withdrawal and Consumption, 2002

Source: Igor A Shiklomanov, State Hydrological Institute (SHI, St. Petersburg) and United Nations Educational, Scientific
and Cultural Organization (UNESCO, Paris). 1999. Water Resources 2000-2001, People and Ecosystems: The Fraying
Web of Life. World Resources Institute (WRI), Washington DC, 2000, Paul Harrison and Fred Pearce, AAAS, Atlas of
Population 2001. American Association for the Advancement of Science, University of California Press, Berkeley.
Figure 5. Average Daily Water Use Per Capita

Source: UNDP Human Development Report 2006
www.europac.ca 5
Figure 6. Map of Blue Gold – Global Relative Water Scarcity

Source: United Nations Statistics Division, 2011
Global Macro Trend – Water and Climate Change
Water is intimately tied to the climate because it is ultimately climate and weather patterns that determine
the availability and distribution of water. Now that climate change is a widely accepted phenomenon,
investment and resource planning for water must anticipate changes in water distribution and water
quality from global warming. Data from NASA indicates that global surface temperature in 2011 is 0.51°C
higher relative to 1951-1980 average temperatures. According to NASA, the most intense warming is
taking place in the Arctic where the Arctic sea ice has shrunk to a new low (Figure 7). The excess melt
water flowing to the sea causes a rise in sea level, which has had adverse impacts on agriculture due to
salinization of low-lying farm land.
The climate system is very complex as it is made up of ocean currents, air currents, biosphere, frozen
ice and permafrost. The theory behind climate change is that warming of the earth’s surface increases
evaporation rate on land, making it drier and more prone to droughts. At the same time, a warmer
temperature increases evaporation from the ocean so there is more moisture in the air, causing heavier
precipitation and bigger storms. Global warming is paradoxical because it will initially cause more intense
heat waves in arid regions and more floods in coastal regions in North America. But freshwater from
continued thawing of sea ice could halt warm Atlantic ocean currents from bringing heat to Eastern North
America and Europe, resulting in a regionalized cooling. The Intergovernmental Panel on Climate Change
(IPCC), which includes more than 1300 scientists from the United States and other countries, forecasts a
temperature rise of 1.38°C to 5.5°C over the next century. To put things in perspective, the temperature
change from the last Ice Age was between 2.5°C to 5°C.
6 www.europac.ca
Figure 7. Global Temperature Difference

Source: NASA – Global Climate Change, 2012
Adapt to Climate Change to Avoid Costly Natural Disasters

Climate change intensifies heat waves causing more droughts and desertification. The Palmer
Drought Severity Index (PDSI) is a widely used index to measure dryness in the soil based on
recent precipitation and temperature (Figure 8). The index track changes from 1900 to 2002. In
the upper panel, the red and orange areas of the globe became drier than normal. The green and
blue areas are wetter than normal. The more negative the number assigned to an area (-4), the
drier than normal it is. There is a clear trend that many parts of the globe, namely continental
North America, Central America, Brazil, Central Europe, Africa, Eastern Australia and half
of China, have become drier than normal. The lower panel tracks the changes in wet and dry
patterns over decades. This indicates more areas in the world have become much drier than
normal (red), indicating increased risk of drought and desertification.
Investment in water technologies and water infrastructure must include drought preparation
and flood mitigation. Both droughts and floods are costly natural disasters. Damages caused
by Hurricane Katrina in 2005 had an actual cost between $90-125B USD, with $40-$66B
USD in insured losses. About half of the losses were related to flooding. The total long-lasting
economic loss from Katrina is as high as $250B USD (Source: Swiss Re, “Hurricane Katrina”
January 25, 2007). In the aftermath of Hurricane Katrina, billions of dollars have been spent
www.europac.ca 7
on new flood defenses. In New Orleans alone, $14.6B USD was spent on new flood defenses, or
$17,400 per resident. Flood defense infrastructure includes flood barriers and flood gates but this
report focuses on the implementation of green infrastructures to minimize flooding in the urban
environment. Green infrastructure is further discussed under the ″Domestic Water Use″ section
of the report.
Figure 8. The Palmer Drought Severity Index (PDSI)

Source: Intergovernmental Panel on Climate Change (IPCC). Adapted from Dai et al. (2004b)
The IPCC has forecasted some of the regional impacts of global change.
■ North America: Decreasing snowpack in the western mountains; 5-20% increase in yields of
rain-fed agriculture in some regions from the extra precipitation received from the evaporation
of extra snowmelt water; increased frequency, intensity and duration of heat waves in cities
that currently experience them.
■ Latin America: Gradual replacement of tropical forest by savannah in eastern Amazonia; risk
of significant biodiversity loss through species extinction in many tropical areas; significant
changes in water availability for human consumption, agriculture and energy generation.
■ Europe: Increased risk of inland flash floods; more frequent coastal flooding and increased
erosion from storms and sea level rise; glacial retreat in mountainous areas; reduced snow
cover and winter tourism; extensive loss of species; reductions of crop productivity in
southern Europe.
8 www.europac.ca
■ Africa: By 2020, between 75M and 250M people are projected to be exposed to increased
water stress; yields from rain-fed agriculture could be reduced by up to 50% in some regions
by 2020; agricultural production, including access to food, may be severely compromised.
■ Asia: Freshwater availability projected to decrease in Central, South, East and Southeast Asia
by the 2050s; coastal areas will be at risk due to increased flooding; death rate from disease
associated with floods and droughts expected to rise in some regions.
Phenomena Likelihood of trend

Contraction of snow cover areas, increased thaw in permafrost regions, decrease in sea ice extent Virtually certain
Increased frequency of hot extremes, heat waves and heavy precipitation Very likely to occur
Increase in tropical cyclone intensity Likely to occur
Precipitation increases in high latitudes Very likely to occur
Precipitation decreases in subtropical land regions Very likely to occur
Decreased water resources in many semi-arid areas, including western U.S. and Mediterranean basin High confidence
Figure 9. Global Climate Change: Future Trends

Source: ICPP, adapted from Ibid. p.8
A Canadian Perspective - Water Usage by Sector

Over 60% of total water usage in Canada is attributed to thermal-electric power generation, followed by
mining and metals production at 9%, municipal use at 9% and agriculture at 8%. There are two ways of
determining water usage: Water withdrawal and water consumption. Water withdrawal is the amount of
water withdrawn from its source or used in stream. This includes irrigation, manufacturing, mining, general
thermal electricity, diluting waste and recreation. Much of this water can be returned after treatment. Water
consumption is the consumption of water such as drinking and evaporation. There are different metrics
for measuring water usage. According to Environmental Canada, the average Canadian daily domestic/
municipal use of fresh water per capita was 329 litres in 2004. But the 329 litres did not account for water
used to grow food and manufacture items that Canadians used in their daily lives. The 329 litres also did
not account for water needed to support Canada’s export industry. Factoring in all water requirements, in a
calculation based on total water withdrawals divided by population, the average Canadian used 4400 litres
per day (Program on Water Governance, 2007). In either case, Canada is one of the heaviest water users in
the world, along with the United States, yet has one of the lowest water prices in the world.
Figure 10a. Gross Volume Water Use by Major Canadian Water by Sector, 2005, in Million Cubic Metres Per Year
Source: Natural Resources Canada. Figures derived from “Industrial Water Use, 2005” – Statistics Canada
www.europac.ca 9
Figure 10b. Percentage Water Use by Major Canadian Water by Sector, 2005
Source: Natural Resources Canada. Figures derived from “Industrial Water Use, 2005” – Statistics Canada
Canada’s Water Yield Declining
Relative to the rest of the world, Canada is a water-rich

country, blessed with an ample supply of water from
the Great Lakes, glaciers and snow packs. However,
60% of Canada’s fresh water supply flows north to
sub-Arctic and Arctic regions while most of Canada’s
population resides in the south. To track the change
in Canada’s water stocks known as “water yield”,
a 2010 Statistics Canada study was undertaken to
investigate changes in water yield from 1971-2004.
To more accurately reflect the geography of Canada’s
population concentration, Canada is divided into North
and South by an imaginary North line based on social,
biotic and economic variables (Figure 10). It was found
that water yield for the area below the North line has
globally decreased at a rate of 3.52km3 per year from
1971 to 2004. Associated studies also found that
annual average streamflow and groundwater discharge
have been decreasing over the last few decades. This
data shows that even a water-rich country such as
Canada is not immune to the challenges posed by Figure 11. Statistics Canada’s North Line in Relation to the Canadian Landmass
water scarcity. Source(s): McNiven C., and H. Puderer, 2000, “Delineation of Canada’s North: An Examination of the
North-South Relationship in Canada,” Geography Working Paper Series, Statistics Canada Catalogue
Note: The North line is a statistical area classification no. 92F0138MIE.
of the North based on 16 social, biotic, economic and
climatic variables that delineate the North from the
South in Canada.
10 www.europac.ca
Figure 12. Average Annual Water Yield for Southern Canada in Decline, 1971 to 2004
Source: Using a Trend-cycle Approach to Estimate Changes in Southern Canada’s Water Yield from 1971 to 2004, September 2011
Agricultural Water Use

Globally, 60% of the world’s water is used for agriculture, both in crop irrigation and livestock.
Agricultural water use is divided into irrigation and livestock. Much of the world’s crops rely on
natural rainfall and 20% of farmland is irrigated. In a 2003 Agriculture and Agri-Food Canada
report, agricultural water supply issues and constraints were identified for each province. The
report was aimed to identify key issues in each province to better deploy $60M of federal funding
in order to expand water supply.
Agriculture-intensive provinces like Ontario,

Alberta, British Columbia and Saskatchewan
all face limited supply which is often already
fully allocated. All provinces have limited local
capacity for supply water and most lack adequate
water infrastructure as well as water conservation
measures.
Water Shortage Drives Up

Water and Food Prices
Water shortages and rising water prices are on the
minds of many farmers. In July, 2012, the United
States were experiencing the worst drought in
over 50 years. 50.3% of all U.S. counties across
32 states were under disaster designation with Figure 13. National Summary of Water Supply Constraints in Each Province
90% due to drought (U.S. Drought monitor). The The main constraints for each province are identified in bold text.
drought resulted in corn and soy bean crop failure Source: Analysis of Agricultural Water Supply Issues National Summary 2003,
Agriculture and Agri-Food Canada
in impacted regions in the U.S. MidWest. The U.S. is
the world’s largest corn producer and exporter. Corn
www.europac.ca 11
is a widely used constituent in all food products including corn syrup and corn starch. A much
larger portion of corn produced is used to feed cattle and poultry and to produce ethanol fuel. The
lower-than-projected corn yield will push food prices upward as it gets more expensive to produce
beef, dairy and eggs. It is estimated that the price of these commodities will rise between 3% and
4% in 2013 (US Department of Agriculture).
Ethanol: Water for Food or Fuel?

Around 30% of corn production is allocated to ethanol production. At the gas station, the fuel that
we put into our vehicles contains 5-10% ethanol. Ethanol increases octane and adds to overall
volume. The U.S. Environmental Protection Agency requires refineries and importers to have a
minimum of 9.23% of their transportation fuel from renewable sources. The Renewable Fuels
Standard, set to reduce U.S. reliance on foreign oil, requires 50B litres of ethanol to be made from
corn this year. In 2010, the Canadian government finalized the Federal Renewable Fuel Regulation
requiring an average of 5% renewable content in gasoline across Canada. Ethanol production
is one of the factors pushing food prices upward. The loss of corn production from drought this
year further compounds the issue of allocating corn to feed livestock or make fuel. However, the
impact on food prices is more significant than the impact on fuel since feed makes up a larger cost
component of meat production. When there is not enough water to grow crops and feed livestock,
using edible crops to produce biofuel is not a sustainable means of producing fuel.
Figure 14. Corn Usage by Segment, 2010

Source: National Corn Growers Association, The World of Corn, 2011
Note: Crop year ending August 31, 2011. HFCS - High Fructose Corn Syrup
Urban Development Competes with Agriculture for Water

Urban centres compete with agriculture for water. Farmers rely first on natural rainfall. If it is
not sufficient, water is pumped from wells, creeks or rivers for irrigation and cattle-raising. As
demand of water increases, more ground water is drawn down from wells and more surface water
is diverted from streams. Traditionally, agricultural water is considered to have lower value than
water for industrial use and municipal use. Agricultural water is diverted from farmlands to urban
centres to support new developments and industrial plants. In arid areas such as California and
Nevada, the competition between domestic water use and agricultural use is magnified.
12 www.europac.ca
Since the beginning of the 1900s, water was diverted from the Colorado River to irrigate the
Imperial Valley, turning it from a desert in Southern California to one of the 10 most productive
regions world-wide. Water shortages in nearby cities such as San Diego, Los Angeles and Palm
Springs demand that more agricultural water be transferred to urban centres. In some cases,
farmers are enticed to fallow and to sell their allotments of water rights to land developers at a
value higher than what they can earn planting crops per acre. Prolonged transfer of water rights to
urban areas is unsustainable. Farms left to fallow will slowly erode and turn back to desert since
desert was what they were before irrigation.
Increasing Salinity in Estuaries Contaminates

Ground Water and Irrigation Water
In a case closer to home, the Fraser Valley in British Columbia is fertile ground for producing the
nation’s blueberries and cranberries. As snowpack melts earlier and faster in the spring from
climate variations, the Fraser River runoff is peaking earlier in the year with less water available in
the summer when the water demand is the highest. A lower river water level compounded by rising
sea level led to the inflow of seawater which mixes with freshwater in the river. This increases the
salinity in the water in low-lying areas of the Fraser River delta. This phenomenon is called “Salt
Wedge Intrusion”. Increased salinity in the river shuts down pumps that pump water from the
Fraser River to irrigate adjacent fields because crops are sensitive to salinity level starting around
700 microsiemens. Salt Wedge Intrusion also contaminates irrigation ditches and water table
with saline water, endangering crops. If Salt Water Intrusion continues as expected, farmers will
need to purchase higher-priced drinking water from the City of Richmond for agriculture purposes.
This increases the cost of farming along with the loss of farmland to salt contamination.
Farm Runoff Pollutes Waterways

Improper agricultural management practices can negatively impact water quality. Sediments,
fertilizers, manures, pathogens and pesticides, known as agricultural nonpoint source (NPS) pollution,
leach into ground water and move into surface water. Higher turbidity levels (more sediments) in
water not only clog gills of fish and block sunlight for aquatic plants, it also allows the attachment of
other pollutants like fertilizers, pesticides and heavy metals onto the soil particles, making it harder
to treat drinking water at municipal water treatment plants. Excess nutrients like phosphorus from
manure and municipal sewage wash into lakes and oceans causing algal blooms. Algal blooms are
the results of rapid growth of algae from increased nutrient levels. The concentrated mass of algae
quickly dies off and decays in bulk while using up dissolved oxygen in the water. This results in the
death of aquatic animals from oxygen depletion. Cyanobacterial algae blooms are toxic and prevent
the use of lakes and beaches for recreational and tourism purposes (Figure 15).
Drinking Water Pollution

Drinking water nitrate contamination from inorganic fertilizers and other sources can cause
methemoglobinemia or “blue baby syndrome,” which is potentially fatal for infants. Health Canada
has set a 45mg/L or 45ppm maximum acceptable concentration (MAC) for nitrate (or 10mg/L
for Nitrate-Nitrogen) in drinking water while the U.S. EPA has set an enforceable regulation for
nitrate, called a maximum contaminant level (MCL), at 10mg/L. An Environment Canada survey
www.europac.ca 13
of groundwater in the Fraser Valley

of British Columbia shows 60% of
wells were found to have nitrate levels
exceeding 45mg/L. The survey shows
increased population and intensive
agriculture have gradually increased the
mean concentrations of nitrate in B.C.
groundwater between 1975 and 1990.
Over 40% of Section 319 Clean Water
Act grants have been used to control
Figure 15. Toxic bloom of cyanobacteria from Eutrophication
NPS pollution from working farms and (increased nutrient levels) of the Potomac River, Washington, D.C.
ranches in the U.S. Source: Sasha Trubetskoy
Investment Opportunities in Agriculture

1. Increase Irrigation Efficiency and Water Conservation: Drought-tolerant crops and wa-
ter-efficient crops with similar levels of nutritional and economic value can be developed
and planted to reduce water intake. Companies like DuPont (NYSE:DD) and Monsanto
(NYSE:MON) are developing water-tolerant crops. Water-tolerant crops can be developed
by artificial selection or genetic engineering. Micro-irrigation systems, which consist of drip
irrigation systems and sprinkler irrigation systems, can reduce water demand. The global
drip irrigation systems market is expected to reach $996.7 million by 2016, growing at a
CAGR of 19.0%. The global sprinkler irrigation system market is projected to reach $2,418
million by 2016, growing at a CAGR of 17.4%. (Markets & Markets, 2012) Weather-based
“smart” irrigation controllers determine irrigation need from local weather data and water
accordingly. Soil moisture sensors and rain sensors prevent irrigation cycle when the soil
does not require it. E.S.I. Environmental Sensors (TSXV:ESV) provides soil moisture sensors
and monitors for agriculture.
2. Rainwater Harvesting : Rainwater harvesting systems collect and store rainfall for later
use. Not only does it provide a source of water, it also reduces flooding and fertilizer/pesti-
cide runoff contamination.
3. Water Recycling: Using recycled industrial and municipal wastewater and other low quality
water to irrigate fields.
4. Better Agricultural Management: Slow-releasing (organic) fertilizers can minimize fertil-
izer farm-runoff and contamination.
5. Employ Soil Conservation Equipment: No-till or low-till farming equipment helps to retain
moisture in soil and reduce water usage.
6. Hydroponics: Hydroponics allows cultivation of plants using nutrient solutions in water
without the use of soil. This potential solution has both advantages and disadvantages.
A major advantage is that this can cut down on water costs as water is reused and stays
within the system. A disadvantage is the possibility of a higher set-up cost.
14 www.europac.ca
Industrial Water Use

In 2009, Canadian industries withdrew 30.6B m3 of water, 86% of which was utilized by the
thermal-electric power industry. The manufacturing industry accounted for 12.4% of the total
industrial water withdrawal in Canada and the mining industry took 1.6% of the total industrial
water withdrawal. A similar pattern exists in wastewater discharge. Total wastewater discharge for
the three industry groups was 29.9B m3.
Water Use in Energy

Water Consumption in Power Generation – Energy and Water
From coal fired power plants to nuclear power plants to geothermal power plants, water is an integral
part of generating electricity. Generation of electrical power is one of the largest uses of water worldwide.
Water is heated to produce steam which turns turbines to generate electricity. Large volumes of water are
required to cool and condense the steam after it leaves the turbine. Hydro-electric dams rely on water flow
to generate electricity. Nuclear power plants need a continuous flow of water to cool the reactor. Water
flows through the reactor core and carries the heat away from the core. Without proper cooling, reactors
face the risk of being damaged. Figure 16 shows the amount of water required to produce each megawatt-
hour (MW*h) of power in each generation method.
For a frame of reference, a megawatt hour is equivalent to the amount of electricity used by 330 homes
in one hour (Statistics Canada, Households and the Environment Survey: Energy Use, 2007). Wind and
photovoltaic solar have the lowest water requirement per MWh produced. This is followed by fossil fuels
(coal, traditional oil and natural gas). Enhanced oil recovery from oil wells demands more water because
of the injection of water into a reservoir to maintain pressure. This process allows higher recovery of oil and
produces a large quantity of heavily contaminated brine at the surface. Similar rule applies to oil sands
where steam is used to strip bitumen from clay and sand. Natural gas is the more water efficient choice
of fossil fuel when the conventional method of extraction is used. Unconventional natural gas extraction
method such as hydraulic fracturing of shale gas formation requires a large amount of water to crack open
rock formations. Hydro-electric power generation, considered the low-emission alternative of baseline
power generation, wastes the most water due to evaporation. However, water evaporated does not cause
environmental contamination as seen with other methods of power generation. Considering technologies
are available to transform wind, tidal and solar energy into usable power, these technologies are the
preferred choices going forward in face of global water scarcity.
Figure 19. Water Use in Gas and Liquid Fuel Production

Source: Euro Pacific Canada, Adapted from US Department of Energy, Energy Demand on Water Resources. Report to Congress on the Interdependence of
Energy and Water, December 2006 and World Economic Forum Energy Vision Update 2009 – Thirsty Energy: Water and Energy in the 21st Century
www.europac.ca 15
Figure 17. Impact of Power Generation on Water Quantity and Quality

Source: Energy Demand on Water Resources – Report to Congress on the Interdependency of Energy and Water
(US Department of Energy December 2006)
Figure 18. Projected Water Consumption for Thermoelectric Power Plants

Source: World Energy Council – Water for Energy, 2010 and DOE-NETL, 2008
* The values for hydropower water consumption are based on median evaporation rates calculated by Gleick 1994.
On a global scale, an agreed scientific method for measurement of net evaporation rates from hydropower reservoirs
has not yet been established and evaporation rates might vary considerably from case to case.
16 www.europac.ca
Water Consumption in Fuel Production - Cars Won’t Run Without Water

Our transportation dependence on water is laid out in terms of the water requirements to produce one
gigajoule (GJ) of liquid fuel (Figure 18). What is interesting is that the cultivation of corn and soybean
for the production of ethanol and biodiesel is by far the most water-intensive form of fuel. In an effort
to mitigate carbon dioxide emission, biofuel is added to petroleum to reduce fossil fuel requirement. In
exchange, water, another resource, goes into the production of biofuels. Biodiesel (recycled vegetable
oil or virgin vegetable oil) production is less water-intensive than ethanol production because the
chemical reaction involved in biodiesel production does not take place in water (no fermentation).
Second generation ethanol production is unlikely to use less water than current technologies as both
generations require the same water-phase fermentation process. The use of recycled vegetable oil
will greatly reduce water demand in biodiesel production. Natural gas remains a water frugal choice.
However, natural gas is not renewable. The more sustainable alternative both in terms of carbon
emission and water resource utilization is the continued shift to electric cars.
Raw Materials Litres Per GJ Transformation Litres Per GJ Total L Per GJ

Traditional Oil 4-3 30-70
Oil Enhance Oil Recovery 50-9,000 Oil Refining 25-65 75-9,100
Oil Sands 70-1,800 95-1,900
Corn 9,000 - 100,000 Ethanol 47-50 9,000-100,000
Biofules Soybean 50,000-270,000 Biodiesel 14 50,000 - 270,000
Sugar n/a
Coal Coal 5-70 Coal-to-liquids 140-220 145-290
Traditional Gas Minimal 7
Gas Natural Gas Processing 7
Shale Gas 36-54 43-60
Figure 19. Water Use in Gas and Liquid Fuel Production

Source: Euro Pacific Canada, Adapted from US Department of Energy, Energy Demand on Water Resources. Report to
Congress on the Interdependence of Energy and Water, December 2006 and World Economic Forum Energy Vision Update
2009 – Thirsty Energy: Water and Energy in the 21st Century
Warm Seawater Shut Down Nuclear Power Plant

In August of this year, Connecticut’s Millstone nuclear power plant shut down one of its units because the
seawater used to cool down the reactor was too warm. Cooling water entering the plant cannot be warmer
than the operational limit of 23.9°C. Unit 2 of the power plant was shut down because the cooling water
was on average 0.94°C higher than the operational limit. Mild winter and summer extreme heat resulted
in an unusually warm water temperature in the Long Island Sound, about 3°C higher than normal. It is the
first time in Millstone’s 37 year history to experience a shutdown due to excessively warm water. The two
units produce 2,100 megawatts of electricity, providing 50% of all power used in Connecticut and 12% in
New England. With one unit down, the plant lost 40% of its power output. Unit 2 was reopened two weeks
later when the water temperature cooled to 22.2°C. Nuclear power plants drawing water from inland
water bodies such as rivers and lakes do shut down or power down from elevated water temperature;
however, Millstone’s shutdown was the first of its kind in regards to power plants drawing cooling for open
bodies of water like the sea. This serves a clear indication that power generation is likely to be affected by
global warming. Power plants in vulnerable areas must find a cooling solution that is not completely
dependent on water quality (temperature) and quantity.
www.europac.ca 17
Future Power Generation Constrained by Water Availability and Quality

Beyond the limited availability of fossil fuels and metals, power generation is most limited by water
availability. Surface water is the source for more than 99% of total thermoelectric-power withdrawals
(USGS). In coastal areas, the overall withdrawal of saline water instead of freshwater grows available water
supply. According to USGS, thermoelectric-power withdrawals accounted for 49% of total water use, 41%
of total freshwater withdrawals, and 53% of fresh surface-water withdrawals, making it the largest water
user in many industrialized countries.
Water has become the limiting factor for all types of energy generation. China and India have plans to build
$720B of coal-fired plants in 20 years, which is equal to twice of the total power capacity in the U.S. today
(International Energy Agency). In China, Beijing shut down around 50 factories and relocated power plants
to the coast as the result of the lack of water. Inner Mongolia is undergoing desertification because rivers
are diverted to power coal industry. Millions of farmers around the globe have lost their livelihood from
losing water to power generation.
According to the World Energy Council, the world’s energy demand is projected to triple by 2050. The
accompanying water demand is expected to more than double, at 2.5 times the present consumption.
Utilities need to take future water scarcity and quality into consideration when projecting power plant
construction. The curtailment of operation from droughts reduces MWh generated. It is called a “derating
event”. In a 2007 summer drought, Duke Energy power plants in Catawba-Wateree Hydro Project in
North and South Carolina experienced significant generation derating events due to National Pollutant
Discharge Elimination System (NPDES) thermal limits and /or flow restrictions by the EPA. These events
resulted in economic loss of over US$13M in August alone across all Duke plants. (Water Resource Risk
and Technology Investment under Uncertainty, University of Michigan, 2009) With projects having 30 to
40 year lifespan, the implication is that there might not be water that meets regulatory quality and
quantity to fully realize their investment value.
Figure 20a. Hoover Dam and Lake Mead from 1983 Figure 20b. Hoover Dam and Lake Mead from 2009
Source: Southern Nevada Authority Source: Southern Nevada Authority
18 www.europac.ca
Investment Opportunities in Energy
1. Dry Cooling and Hybrid Cooling Systems: Dry cooling systems use air to cool the reactor
instead of water. This allows power plants to be situated in areas without abundant water
supply. The downside is that air cooling exchanges water savings with lower efficiency.
Another potential water-saving solution is hybrid cooling (combination of dry and wet
cooling). Close-loop evaporative systems recycle cooling water where open-loop systems
return water after it passes through the cooling tower. The closed-loop process consumes
more water due to evaporation but reduces water withdrawal from surrounding water.
2. Combined-Cycle Gas Turbines: The natural-gas-fired combined-cycle turbine uses

about 50% of the water used in coal-fired plants. Using natural gas potentially
represents significant water savings. However, water advantage of natural
gas depends on the method of natural gas extraction. Unconventional natural
extraction methods such as hydraulic fracturing could offset some of the savings.
3. Biofuel: Waste Recycling and Agaculture: Biofuel production requires the most amount of
water from crop cultivation. With increasing demand for food, production of biofuel seems to
be an unintelligent usage of water. Potential solutions include retrieving raw materials from
waste such as waste vegetable oil or inedible crop residues. Agaculture, or the cultivation of
algae, is gaining promise as the sustainable alternative to crop-based biofuels. Algae biofuel
does not decrease food production and can be grown in ponds and even in wastewater.
4. Wind and Solar Photovoltaic: The obvious choice in water conservation

and in power production is the continued investment in wind and
solar photovoltaic. In arid areas where water is scarce or unavailable,
solar and wind provide the ultimate power solution to water shortage.
5. Mining of Raw Material: Water-saving in power generation should start at the beginning
of the value chain which is the mining of raw materials. An example is to mine cleaner
coal called Powder River Basin coal (or Western coal) instead of Appalachian coal (or
Eastern coal) in the U.S. Powder River Basin coal is mined by surface mining (around 8
litres of water required per Btu of energy mined) and Appalachian coal is typically mined
by underground mining (around 20 litres per Btu) (Gleick, 1994). Western coal contains
lower Btu per tonne and has higher water content as well as lower impurities. Using
Western coals saves water in the coal washing/refining process because Western coal
rarely requires washing. Western coal can be upgraded to achieve the same combustion
efficiency and heat content as Eastern coal by different coal upgrading technologies.
Clean water recovered from upgrading Western can be reused in other processes. An
example is Carbon Friendly Solution’s (CNSX:CFQ) microwave clean coal technology,
which can evaporate moisture from Western coal.
www.europac.ca 19
DOMESTIC WATER USE
“God Gave Us Free Water.

He Just Forgot to Lay the Pipes.”
Water is Not Free - Canada’s 31 Billion

Municipal Water Infrastructure Deficit
The appearance that water is bountiful is an illusion. Less than 1% of the world’s water is read-
ily accessible and most of it cannot be consumed directly without water treatment and delivery
infrastructure. At the same time water is being polluted and taken out of supply. Billions of dollars
have been spent on clean-up to restore polluted water back to a usable state. The biggest problem
in domestic/municipal use of water stems from the prolonged under-charging of water to end us-
ers. Water has been heavily subsidized because it is considered the most essential part of public
service. About 50% of Canadian municipalities charge a flat rate for virtually unlimited water us-
age and a smaller portion charge a lower rate for larger quantities used. For example, in Toronto,
general users of water are charged $2.4897 per cubic metre for the first 6000 cubic metres used
and $1.7824 per cubic metre for usage over 6000 cubic metres. Contrast this to electricity pricing
in Ontario, where Lower Tier Price of 7.5¢ per kWh is charged for the first 600 kWh and Higher Tier
Price of 8.8¢ per kWh is charged over 600 kWh of usage. Canadian water prices do not embed
features such as seasonal pricing or peak pricing. Together these practices do not promote water
conservation and have resulted in the careless use of water by end users such as leaving the fau-
cet running while brushing teeth and lawn over-watering.
The Mystery of Water Pricing

Water pricing is difficult and poorly understood because water usage is not well documented due to
lack of metering and leakage in pipes. Canadian municipalities lose or cannot account for 20% of
the water leaving their treatment plants. Hence it is very difficult to fully price water, which leaves
infrastructures significantly underfunded and governments indebted. In 2007, revenues earned by
water agencies only covered 70% of their expenditures (C.D. Howe Institute). What is most alarm-
ing is that the expenditure does not take into account the value of raw water obtained. Raw water
has been sourced for free without consideration of long-term sustainability. Environmental damage
from sewage discharge has not been monetized. “Full-cost recovery” pricing of water will account for
the cost recovery of water infrastructure and water treatment. If such pricing is not implemented,
municipal water infrastructure deficits will continue to grow. More federal and provincial tax dollars
will be needed to finance capital requirements for municipal infrastructure repair, expansion and
technology upgrades. Governments are already under fiscal constraints where budgets need to sup-
port the healthcare system and the education system, among others. It is most certain that funding
for municipal water infrastructure will continue to come from water tariffs on users. Water prices will
continue to climb at an accelerating pace.
20 www.europac.ca
Figure 21. Revenues and Expenditures of Canadian Municipal Water Agencies, 1998 – 2007
Source: C.D. Howe Institute, Statistics Canada
Figure 22. Revenues and Expenditures of Canadian Municipal Water Agencies, 1998 – 2007
Source: C.D. Howe Institute, Statistics Canada
Water Prices Growing Faster than Electricity Prices

Aging water infrastructure is causing main breaks, leaks and storm water overflows. Water and sewer
rates or water utilities rates are rising from 5% to 10% per year in many communities due to the costs
associated with replacing aging pipes (Ontario Water Conservation Alliance, 2011). In Toronto, water
utilities rates have been rising at an average of 9.3% per year since 2006. Toronto’s municipal water
utilities rates have more than doubled since 2004 (Figure 23a). To put this in perspective, Toronto’s
electricity rates increased 1.6x over the same period. To residents and industries in Toronto, water pric-
es are rising faster than electricity prices (8.52% CAGR for water versus 6.38% CAGR for electricity). It is
projected that, assuming business as usual, water prices will double again in 10 years just to keep up
with maintenance costs, excluding costs associated with new infrastructure. The City of Toronto also an-
nounced additional increases in seven water service fees such as water meter accuracy test and water
service installation and five new water service fees, effective January 1, 2012. This trend of water utili-
ties growing faster than other utilities is also mirrored in the U.S. urban cities (Figure 24) where water
and sewer prices are now double the electricity prices compared to prices levels roughly 30 years ago.
www.europac.ca 21
The average Canadian daily domestic use of fresh water

per capita was 329 litres in 2004 (Environment Canada). In
contrast, the European average is 200 litres per day and 10-20
litres per day in sub-Saharan Africa.
Canadian cities are among the heaviest water users with

noticeably low prices in comparison with other industrialized
nations (Figure 25 a & b). In nations with the highest water
prices, such as Denmark and Germany, water consumptions
are also the lowest. Danish and German legislations require
full cost recovery for both water supply and sanitation (sewer).
Metering is also universal in Germany. The low water pricing
in Mexico is a reflection of shortfalls in essential spending on
Figure 23a. Historical & Projected Toronto Water and Sewer Rates drinking water quality and supply as well as sewage treatment.
Source: Euro Pacific Canada. Historical Rates from the City of Toronto.
Note: Toronto City Council adopted a new water rate structure that will charge one General Water Rate for all water
consumed as of January 1, 2008. This change came after reviewing Toronto’s seven-block-pricing structure during the
2006 water rate setting process.
Figure 23b. Toronto Utilities Consumer Price Index

Source: Euro Pacific Canada. Data derived from City of
Toronto and Ontario Energy Board
Figure 25a. World Municipal Water Prices

Source: Canada West Foundation, 2011. Data Derived from Global Water
Tariff Survey, 2008, conducted by Global Water Intelligence (GWI) and
the Organisation for Economic Cooperation and Development (OECD).
Figure 24. Trend in Consumer Prices for Utilities – U.S. Urban Cities Average
Source: Michigan State University – Institute of Public Utilities Regulatory
Research and Education (2012) Trends in the Consumer Index for Utilities
(1969-2011) The index is set to 100 for 1982-1984 except for telephone services, Figure 25b. Purchasing Power Parity Adjusted Water Prices vs. Water
where the index is set to 100 for 1997. Consumption Source: Canada West Foundation, 2011. Expert Panel on
Ground Water – Wave of the Future, Steven Renzetti, 2009.
*Prices reflect water supply charges only and exclude sanitation charges and taxes.
22 www.europac.ca
Water Rights – Water Trading

Water trading is a foreign concept to the urban population. However, ownership and trading of physical
water has been taking place in southeastern Australia and along the Colorado River in Western U.S.A. In
the arid Murray-Darling Basin of Australia, there is not enough water for agriculture and other users. A
water trading system was implemented. Instead of paying fees to the government for a fixed amount of
water, farmers and other users can decide how to use their water rights. They could grow rice or grapes
with the water or sell it to neighbouring businesses for potentially more money than what they would
make growing crops. The price of water actually fluctuates based on precipitation, agricultural commod-
ity prices and other competing uses of water. Cultivating rice is water-intensive whereas cultivation of
alfalfa is less water intensive yet alfalfa fetches a much higher price in the market. Because of this, the
cultivation of rice has largely been discontinued. The upside of this water trading system is that it al-
lows efficient allocation of water and promotes conservation. Water trading can be an efficient resource
management tool. The downside of water trading is that it does not consider non-economic value of
water. Planting rice would ensure an independent and stable supply of carbohydrates without relying on
imports of carbohydrates.
Sometimes the value of water rights on a piece of land can be more than the infrastructure or farm on
top of the land. In the case of the Colorado River, most of the transactions along the Colorado River
transfers water from agriculture to municipal and industrial use. This type of transfer has unintended
consequences because once water is transferred to urban centres, it is unlikely that it will be trans-
ferred back to agriculture. The irony is that more agricultural food production is needed to support the
growing population in urban centres. Environmental groups like Trout Unlimited have also purchased
water rights just for the water to remain untouched and left in the river. For most investors, investing in
the physical ownership of water (water rights) is not feasible and not accessible because regulations are
prohibitive of the private ownership of a public resource.
Centuries Old Power Struggle Over Water Rights

In the case of the Colorado River, there have been fights and lawsuits over the right to draw water from
the river because the river runs through several states. The political power of the states can determine
its share of water allocation. The Colorado River Compact, signed in 1922, determines how much share
of the Colorado water is allocated among seven states. This compact is outdated as urbanization, in-
dustrialization and environmental issues were not of concern back in 1922 as they are today. Political
power has also shifted between states. Such an outdated water agreement is a barrier to innovative wa-
tershed planning from improved scientific understanding of water flow. However, opening the compact
for review was strongly opposed by states that do not want to lose their share of water.
This centuries old phenomenon is also present on the international scale as in the case of Jordan
River that runs through Israel, Lebanon, Syria and Jordan. Sensitive issues like water right, essential to
survival in the desert, lie in the centre of the Arab-Israeli Conflict. Conflicts arose over numerous water
diversion projects for irrigation. The flow of the Jordan River has been reduced to 5% of its natural flow
by the time it reaches Jordan, due to diversion projects in upstream countries like Syria and Israel. At
the same time, the water has become more polluted downstream from farm and industrial discharges
upstream. The Jordanian government has been building the $1.1B Disi Water Conveyance project, at-
tempting to tap into a non-renewable 300,000 year-old aquifer. The water in the aquifer has found to
www.europac.ca 23
be radioactive from a 2009 study by Duke University; the Jordanian contends this finding. Radioactive
substance can be filtered by membrane or ion exchange. Of course, it comes with it a higher price tag.
In Jordan’s case, dealing with radioactivity is better than being thirsty.
Diverting Additional Water from Rivers and Lakes Not an Easy Task
In the Great Lakes in North America, where 21% of the world’s fresh water resides, various treaties and
agreements have been signed to prevent unauthorized diversion of water out of the Great Lakes. The
Great Lakes-St. Lawrence River Basin Sustainable Water Resources Agreement and the Great Lakes-St.
Lawrence River Basin Water Resources Compact (both dated December 13, 2005) were negotiated
between Ontario, Quebec and the eight Great Lakes U.S. States (Illinois, Indiana, Michigan, Minnesota,
New York, Ohio, Pennsylvania and Wisconsin) to install new water protection measures. Water withdraw-
al and polluting activities also face strong opposition from local residents and environmental groups
around the Great Lakes. In many places ancient tribes have lived on their ancestral land for many years.
Water is part of their heritage and is not touchable. Resource extraction companies looking to withdraw
water from ancestral land have encountered legal issues. Besides the cost and logistics of building
new infrastructure, new sources of water are not easily obtained. This further demonstrates that water
conservation and recycling should take precedent over securing new sources of water.
Water Privatization Controversy

Canadian municipal drinking water supply and wastewater treatment is run by municipal govern-
ments. In contrast, most of United Kingdom’s water was privatized under Margaret Thatcher’s admin-
istration. U.K.’s water utilities are owned and operated by publically-traded companies and private
companies and not by the government. Other countries including U.S.A., China, France and Brazil
have a mixture of publically-run and privately-run water utilities. Some countries including Nether-
lands, Nicaragua and Uruguay ban water privatization outright. Like Canada, Japan’s and Egypt’s
water are not privatized. About 40% of Europe’s population is serviced by the private sector. Around
20% in North America and 10% in Asia are serviced by the private sector. Europe’s history of water
privatization gave birth to global water giants like Veolia Environment (ENXTPA: VIE) and Suez Environ-
ment (ENXTPA:SEV) who operate water utilities globally. In the U.S., companies like American Water
Works Company (NYSE:AWK) provide water and water sanitation services in 16 states. There are dif-
ferent degrees of water privatization. Water privatization ranges from the outright ownership of water
and utilities to partnerships between the government and private sector (Public-Private Partnerships)
where the private sector is only responsible for operations and maintenance of water utilities and not
responsible for capital investment.
Water privatization opponents see water service as an essential public service which should
remain in the hands of government. Water privatization advocates argue that privately-managed
water utilities improve quality of water and service efficiency. They argue that private companies
are able to run water utilities like a business and have faster rates of new technology adoption,
which increase efficiency. However, this argument is not valid as there are both success stories
as well as failures in water privatization. Most water privatization opportunities exist in the
Middle East and East Asia. In Canada, where water privatization is unfamiliar, the P3 Canada
Fund was created to foster private sector involvement in the improvement and delivery of public
infrastructure projects in the form of Public-Private Partnerships.
24 www.europac.ca
Global Water and Wastewater Treatment Market

The global water and wastewater treatment market is estimated to be $360B USD annually. About half
of the market, or $185B, comprises of municipal utilities services. About one-fifth of the municipal utili-
ties market comes from private sector operations while the remaining four-fifths belong to public gov-
ernment operations. The private sector generates more revenue per customer because full cost pricing
of water is employed (S-Network Global Water Indexes). Out of the $360B market, $100B comes from
engineering and construction, $80B related to water treatment products and $9B is from residential
water treatment equipment. According to The Freedonia Group, world demand for water treatment prod-
ucts will rise 6.2% annually through 2015 with China being the fastest growing major market. Western
Europe, U.S. and Japan markets will see growth in advanced membrane systems, disinfection, desalina-
tion equipment and industrial wastewater treatment chemicals.
One Person’s Waste, Another Person’s Gold -

Blurring the Line Between Water and Wastewater
Drinking water or potable water treatment is essentially the purification of water from rivers or
lakes. The treatment processes follow a format but the specific processes can be added or sub-
tracted depending on the source water. For example, Toronto draws its drinking water from Lake
Ontario while Vancouver collects water from snowmelt. Many cities share the same river as it flows
through provinces and states. Cities located upstream draw water from the river and discharge
treated wastewater or sewage back into the river. The same water is then drawn by cities located
downstream for drinking. The process of treating drinking water upstream, followed by wastewater
treatment and the re-treating water downstream is inefficient and requires a drastic rethinking of
what is raw water. As in the case with Toronto, water is both drawn from Lake Ontario for drinking
and simultaneously being discharged back to the lake as wastewater. The perceived difference
between raw water and wastewater does not exist. Wastewater is viewed as “resource” water.
Figure 26. Singapore’s Reclaimed
To demonstrate this view, Singapore is the world leader in producing drinking quality water directly Water, Branded NEWater
from wastewater. Singapore was looking for a way to reduce its reliance on Malaysian water im- Source: Singapore Public
Utilities Board
ports. The Singapore government was evaluating the options of producing water from desalination
or wastewater. It has become successful in producing water from wastewater. NEWater is the brand
name given to reclaimed water produced by Singapore water utilities. NEWater is drinking quality
but is largely used for the manufacturing of electronics.
Drinking Water Treatment Processes

Drinking water treatment follows the general treatment procedures with modifications according to the
characteristics of the input water:
1. Pre-treatment: Water needs to be pumped from its source via aquaducts or pipes to storage
tanks or treatment plants. The first step in purifying water is to screen out large particles such
as leaves, branches, fish, weeds, gravel or garbage. These objects can damage pumps if not
removed. Water can be aerated to remove dissolved gases and improve odour. Then the pH of
the water is adjusted upward by adding lime or soda ash or downward by adding acid. Slightly
alkaline water enables coagulation and flocculation and reduces corrosion in pipes. Sometimes
chlorine is added at this point to prevent the growth of bacteria.
www.europac.ca 25
2. Coagulation and Flocculation (Particle aggregation): Flocculants and coagulates such as

aluminum sulphate, iron salt or polymer are added to enable flocculation and coagulation or
simply “particle aggregation”. Larger mixers slowly stir the water to cause particles like silt,
algae and other organic particles to collide and stick together to create large clumps.
3. Sedimentation (Clarification): Water exiting the flocculation basin is allowed to settle in the
settling basin (also called clarifier tank) for a few hours. This process allows aggregated particles
and coagulants to sink to the bottom called “sludge” for later removal. About 85% of suspended
materials settle at this stage. Sludge (3 to 5% of total water volume treated) must be treated and
represents a significant part of the cost of operating a water treatment plant.
4. Dissolved Air Flotation (DAF): Air diffusers create tiny bubbles that push hard-to-settle
particulates upward. The top layer of the water or floc blanket is then skimmed to remove the
particulates. Particulates removed require further processing.
5. First Disinfection – Ozonation: Adding ozone to the water destroys harmful bacteria and
improves filter performance in the next stage and controls odour and taste of water.
6. Filtration: This step removes small remaining particles in the water including parasites as well
as remaining organic material dissolved in the water. This step reduces cloudiness or turbidity.
There are several types of filtration systems including activated carbon, membrane filtration, ion
exchange or electrochemical (Figure 28). Usually activated carbon filter is the filter of choice for
this step. Other types of advanced filters are used for specialty treatments, like making ultrapure
water or removing pharmaceuticals. The activated carbon filter can be cleaned by backwashing
. The backwashed water requires additional treatment before disposal into sewage and landfill.
7. Second Disinfection – Chlorine Contact: Chlorine or chloramine (chlorine and ammonia) are
the most common disinfectants added to kill or inactivate bacteria and viruses. Chlorine is
a residual disinfectant where the chlorine prohibits the growth of pathogens in water as it is
delivered to the end user. Adding chlorine to water can form harmful by-products with naturally
occurring organic matter dissolved in the water; such by-product is removed.
8. Third Disinfection – UV: Ultraviolet lamps penetrate remaining parasites, cryptosporidium and giardia.
9. Optional Treatment: Examples include fluoridation to prevent tooth decay, addition of ortho-
Phosphate or lime to prevent lead leaching from pipe corrosion, conditioning of soft water by
adding soda ash, removal of naturally-occurring radioactive element or removal of fluoride ion if too
much fluoride is present in water. Note: Fluoridation is a controversial public health service where
opponents believe medicating water should be up to the individual’s personal choice and consent.
10. Distribution and Storage: Drinking quality water is pumped from the treatment plant into the
distribution pipe system. This system of pipes, booster pumps, valves, fire hydrants, meters and
service lines is responsible for delivering drinking water to the end user. Valves prevent the cross-
connection of the drinking water system and an unapproved source such as backflow water
from lawn irrigation or cooling systems. Valves also make pipe maintenance and replacement
possible because it isolates portions of the distribution system without interruption to most users.
Drinking water is stored in water towers, usually located at the rooftop of buildings or elevated in
less urbanized areas. Water storage in a water tower is for the purpose of meeting peak demand
of water, usually in the morning. Evaporate loss of drinking water also takes place in water tower,
representing a waste of drinking water treatment resources.
26 www.europac.ca
Figure 27. Typical Drinking Water Treatment Flow Chart

Source: City of Rockville
Wastewater Treatment Processes

Wastewater treatment plants are equally costly as waste treatment plants. In many cities, the
sewage transport and treatment systems are outdated for population growth and mal-adapted for
extreme weather events like flooding.
Pumping: Wastewater is generally 99.8% water and less than 0.2% solid material. Wastewater from
domestic and commercial users flows towards wastewater treatment by gravity. When the flow de-
cline needs a boost, water is ‘lifted up’ by pumping at each lift station. This allows water to flow by
gravity once again towards the sewage treatment plant. Lift stations have backup diesel power to
prevent sewage backup in case of a power outage. In the City of Toronto, there are 510 kilometres
of huge trunk mains, 9955 kilometres of local sewers and 463,300 sewer connections. There are
also 45 pumping stations and five storage and detention tanks.
1. Preliminary Treatment: Wastewater flows through screens where large floating objects like
cans and rags are screened out to prevent clogging of pumps and pipes downstream. Some
plants also grind up screened material at this stage to be removed later in a settling tank. Waste-
water then flows to a ‘grit chamber’ where grits and sand are allowed to settle to prevent exces-
sive wear and tear of pumping equipment and aerating devices. The problem is most severe
in times of flood when a large volume of grits and sand are transported with the storm water.
Grease dumped into the drain will form a ball around any solid waste items with which it comes
into contact (i.e. grease around a cigarette butt). Grease can be skimmed off at this stage.
www.europac.ca 27
2. Primary Treatment (primary sedimentation or primary clarifier): Wastewater is allowed to

settle in the sedimentation tank. Suspended solids sink to the bottom and form a mass of
solids called “sludge”. Sludge can be removed by different methods from the tank. About 50%
of suspended solids in wastewater are removed at this stage.
3. Secondary Treatment: Biological (bacteria) treatment is used in the secondary treatment.

This process can remove up to 90% of the organic matter in wastewater and takes place in the
aeration basin. Industrial sized air blowers pump air into the aeration tank to support biological
life in the temperature-controlled basin. Two general types are attached growth processes and
suspended growth processes. Excess microbes that multiplied from digesting organic matter are
removed. Waste from microbes is treated before disposal or reused as ‘biosolids’. Before proceed-
ing to Tertiary Treatment, wastewater is allowed to settle in the final clarifier basin.
• Attached growth (fixed film) is where microbes grow on the surface of stone or plastic
media. As wastewater passes through the media with proper air supply, biodegrad-
able organic matter (as measured by BOD or the biological strength of wastewater
to use up oxygen) is digested by the bacteria, leaving the wastewater much cleaner.
• Suspended growth is where microbes are mixed in wastewater along with aeration to
provide extra oxygen to promote growth of microbes. Suspended growth units include
a variety of methods such as activated sludge, oxidation ditches (filter beds), lagoons,
constructed wetlands, rotating biological contactors and sequencing batch reactors.
Normally suspended growth units like activated sludge are more expensive to oper-
ate than attached growth units because aeration is required. However, activated
sludge requires less space and is free of odour and bugs under proper maintenance.
4. Tertiary Treatment: This treatment is to further raise effluent quality before it is dis-
charged. It can be done through sand filtration or activated carbon filtration. Another op-
tion is lagooning. Wastewater lagoon is a scientifically constructed pond located out-
doors. Sunlight, bacteria and algae break down organic matter and purify the water.
Nutrients such as phosphorus, ammonia and nitrites are removed by bacteria at this stage
and this process is slowed down when weather conditions are cold. Nutrient sources are farm
runoffs and laundry detergent in the case of phosphorus. Alternatives such as electrochemi-
cal treatment have been developed for ammonia treatment. Phosphorus can be removed by
chemical precipitation.
5. Disinfection: Like in drinking water treatment, ozone or UV or chlorination can be used to dis-
infect water prior to discharge back to the environment. UV is the preferred method because
it requires no chemicals. UV disinfection does not have the residual effect like chlorination,
which is toxic to aquatic life. UV is becoming the standard method for disinfection. It also
does not require storage of chlorine on-site, an additional safety feature. However, chlorina-
tion tends to be cheaper than UV treatment because UV lamps require frequent maintenance.
28 www.europac.ca
Ozone is produced from exposing oxygen to a high voltage current. Ozone is a very effective
disinfectant and does not leave harmful by-products behind. The disadvantage is that ozona-
tion has a high energy cost.
6. Water Discharge and Solid Disposal

Water portion: Treated water is discharged back into the river or the ocean.
Solid portion: Sludge or biosolid is dewatered into sludge cakes. Some of the biosolid is ap-
plied to land as soil conditioner or fertilizer. If a significant portion of wastewater comes from
industrial and commercial sources, toxic substances are present in the biosolids. This type of
biosolid cannot be used as fertilizer. The remaining is trucked to landfills or incinerated.
Filtration Technology How It Works Suitable Applications Limitations

Water is passed very slowly through layers of sand by gravity over weeks or months. • Large scale treatment • Requires a constant flow of
Slow Sand Filters This biological filtration method relies on a thin biological layer called schmutzdecke on • Resulting water very low in nutrients water to work (by gravity)
the surface of the filter.
Activated carbon or charcoal is carbon that has been treated to increase its surface
Activated Carbon or Char- • Particles, organic compounds and oil
area or “active surface”. This increased surface facilitates absorption for contain- • Does not take care of
coal (in combination with • Fast filtration
ments. Activated carbon is used in conjunction with sands and gravel where the bacteria and virus
rapid sand filter) • Filter can be cleaned and reused
carbon removes organic compounds and sand layer removes small particles.
• Cost of pumping oxygen
• Control of micro- organiza-
Activated sludge is a biological treatment process applied in industrial wastewater or • Pulp and Paper tion growing conditions
Activated Sludge sewage treatment. Bacteria and air/oxygen is introduced into wastewater to develop a • High biological matter content water • Bacterial action does not
soup teeming with “active” bacteria. • Ammonia and nitrogen oxidation work well in low or freezing
temperatures or nutrient
deficient sewage
Microfiltration
• Bacterial removal
• Solids removal
Microfiltration: Water is filtered through a membrane to separate containments from Ultrafiltration • Only RO can remove
the fluid. Unlike RO, no or low pressure is applied. • Drinking water preparation dissolved substances such
Membrane Filtration Ultrafiltration: Membranes have smaller pores than microfiltration. It is a low pressure • Pharmaceuticals removal as salt, phosphorous and
•Microfiltration process. RO heavy metals
•Ultrafiltration RO: Water is force to pass through a membrane with tiny pores under pressure to fil- • Desalination • Water needs pre-treatment
•Reverse Osmosis (RO) ter out containments. The end product is cleaned water on one side of the membrane • Removal of virus • Expensive
and concentrated contaminated water on the other side. Suitable for: salts, bacteria • Production of ultrapure water for • Energy-intensive • Mem-
like giardia and inorganic material. electronics brane fouling
• Boiler water feed
• Water softening
• Removal of dissolved substances
• Removal of nitrite and fluoride • The input water should be
• Chemical-free
Electrodeionization (EDI) or relatively clean, usually
Electrodes are used to separate dissolved ions from water. No chemical is required. • Production of ultrapure water used
Electrochemical treated by reverse osmosis
in microchips manufacturing, phar- before hand
maceutical and power generation
Resins and Zeolite:
• Water softening where calcium+ ion
is exchanged for sodium Na+ ions
Resins: Small polymer beads trap unwanted ions in water and put back innocuous • Ineffective with organic
• Nuclear decontamination
ions such as sodium. Removal of uranium, arsenic, copper and nitrite. compounds and biological
Ion Exchange: • Uranium removal
Zeolite: Absorbs unwanted ions. contaminants
Resins, Zeolite and Green- • Production of high purity water
Greensand: Sandy rock or sediments containing a high percentage of the mineral • End product water is salty
Sand Filters Green Sand:
glauconite coated with manganese dioxide. Second generation uses silica instead of • Remediation of resin
• Filters iron, sulfur (rotten egg
glauconite. required
smell), hydrogen and manganese
• Long-lasting when backwashed
regularly
• Energy intensive
Distillation/ Heating water to boiling point and collecting the condensed steam. • Results in very high quality water • Flat-tasting water from
Evaporation oxygen removal
Figure 28. Select Water Treatment Technologies

Source: Euro Pacific Canada
www.europac.ca 29
Figure 29. Typical Wastewater Treatment Flowchart

Source: Environment Canada
Combined Sewer Overflow (CSO)

There are three types of sewers: sanitary sewers, storm sewers and combined sewers.
Sanitary sewers are systems of sewers that carry wastewater from a drain, sink, toilet or appliance to
treatment plants. Sanitary sewer systems use smaller pipes and have a lower cost of wastewater collec-
tion than combined sewers.
Storm sewers collect rainwater or snowmelt from the road and properties and transport precipitation
water to nearby rivers or lakes without treatment. Dumping of grease or chemicals into storm sewers
pollutes rivers and lakes.
Combined Sewers are older systems that are present in older developments of cities. Combined sewers
often appear in films as underground hideaways. Combined sewers carry both sanitary water and storm
water in a single pipe. This poses a problem in rainstorms because storm water quickly overwhelms the
sewer system. To prevent flooding, the combined storm water and sanitary water is discharged without
treatment into the environment causing sewer pollution. Sanitary sewers were designed and built to carry
wastewater from domestic, industrial and commercial sources but not to carry storm water. Storm water
adds to the cost of operating combined sewers. Flood mitigation infrastructures slow down storm water
runoff on concrete and pavements and minimize the risk of combined sewer overflow (CSO) cutting down
sewage treatment cost and environmental pollution.
30 www.europac.ca
Figure 30. Pollutant Found in Raw Water and Wastewater

Source: Primer for Municipal Wastewater Treatment Systems. US EPA
www.europac.ca 31
Figure 31a. Water Conservation Areas in a House Figure 31b. Water Conservation by Fixing Leaks
Source: Environment Canada Source: Environment Canada
Investment Opportunities
1. Water Conservation: The most cost-effective source of new water is water conservation. New wa-
ter from water conservation costs about one-quarter of the cost of new treatment plants, pipes and
pumps. A 10% reduction in Ontario’s water demand over 10 years would save 121M m3 a year,
equivalent to $500M in avoided infrastructure costs (Blue Economy Initiative). There are investment
opportunities in new leak detection technologies where leaks are detected and repaired in an ef-
ficient manner before minor leaks become major water main breaks. Most water lost from leakage
is from minor leaks rather than major water main breaks. Studies have shown that for every $1.00
spent in communities with leak detection programs, up to $3.00 can be saved (Environment Can-
ada). Pure Technologies (TSX:PUR) provides water pipeline monitoring and leak detection services.
As seen in data from different cities, higher water utility rates promote water conservation. The move-
ment towards proper pricing of water cannot be done until water usage is fully accounted for. Instal-
lation of smart water meters that detect change in water flow on an hourly basis will help detect
leaks and monitor peak demand hours. Smarter meters will facilitate water allocation and plan-
ning. GWR Global Water Resources’ (TSX:GWR) FATHOM water management allows real-time read-
ing of water usage and provides more efficient “back office” data and billing system for utilities.
Various flow control devices and retro-fit fixtures that adjust or reduce flow according to re-
quirements are commercially available. Household appliances such as detergent-less or wa-
ter-less laundry machines are also being developed. Personal sanitation and laundering con-
sume most of domestic water use and play a critical part in domestic water conservation.
2. De-centralized or Distributed Water Treatment: Only 1% of drinking quality water is actually con-
sumed. It is expensive to run mass scale water treatment plants only to have 1% of treated water
utilized for drinking. It is more sensible to have water treated at the point of use (POU) at different
standards, be it for drinking, bathing or flushing toilets. The future of water treatment is likely to
move away from centralized treatment at a gigantic water treatment plant to de-centralized
or distributed treatment, where water treatment takes place on site. It is highly inefficient to
transport mass volumes of water from drinking water treatment plants to households, lose a lot of
drinking quality water to evaporation, then transport water back to wastewater treatment plants.
However, such structural change will take place faster in developing countries where there is little
32 www.europac.ca
or no existing infrastructure. In the same theme as distributed treatment, rainwater can be harvested on
building rooftops and treated onsite to reduce reliance on central water treatment systems. An example
of de-centralized wastewater treatment system is Clearford Industries (TSXV:CLI). Clearford is the de-
veloper of the Small Bore Sewer, a de-centralized wastewater/sewage treatment infrastructure where
the soilds portion is digested locally and only the effluent portion is delivered to the centralized waste-
water treatment plants, lowing the infrastructural burden of transporting solids to wastewater plants.
3. Water Reuse and Recycling: Water reuse and recycling will play a big part in reducing fresh water withdrawal. Grey
water, or lightly soiled water from baths, hand basins and laundry machines, can be reused on site. Grey water sys-
tems capture lightly soiled water from showers and baths and reuse it in lawn irrigation or toilet flushing. Grey water
is different from black water, which is highly contaminated water with human waste. Grey water can be reused and
recycled with no health risk if done properly. GLV (TSX:GLV) designs and markets treatment and recycling solutions
and components for municipal and industrial wastewater as well as water used in various industrial processes.
4. Green Infrastructure – Storm Water Management and Adaptation to Climate Change: Storm water adds
burden and costs to wastewater treatment, when thinking from a different angle storm water is an easy source
of water that can be captured and used on-site. Green infrastructure mimics natural landscapes using trees,
vegetation, wetlands and engineering systems to filter water, retain storm water and restore hydrological cycle.
Examples of green infrastructure are green roofs, permeable pavements and rain gardens. In Toronto, green
roof installation ranges between $15 to $25 per square foot versus $8 to $12 per square foot for conven-
tional roofs (Ecojustice, 2008). Owners can recuperate this investment because green roofs last twice as long
as conventional roofs. Green roofs also provide energy savings from their ability to moderate temperature
change, thus requiring less heating and cooling. Having more vegetation covers like green roof rather than
impermeable concrete surfaces moderates the effect of climate change. Vegetation moderates tempera-
ture and moisture level in times of drought. Vegetation on the ground is able to absorb storm water, reduce
surface flooding and reducing load on wastewater treatment plants. Permeable pavement allows street sur-
faces to absorb water and reduce flooding. However permeable pavement is still in early stages of develop-
ment and the cost of replacement can be high. H2O Innovation (TSXV:HEO) offers a portfolio of membrane
technologies to municipalities and industrial customers for the treatment of drinking water and wastewater.
5. Water Treatment Technologies – Innovation and Treatment of New Contaminants: There is a wide selec-
tion of innovative water and wastewater treatment technologies including advanced filtration and disinfection
technologies. These technologies aim to 1) recover nutrients from wastewater 2) provide a lower cost or more
efficient alternative to conventional technologies and 3) treat previous undetectable compounds such as phar-
maceuticals and pesticides. With the advancement of medicine, hundreds of new pharmaceutical compounds
are now present in water. Numerous types of hormones including birth control pills and growth hormones
used in livestock, vitamins and antibiotics have a constant presence in water. Our current drinking water and
wastewater treatment systems can eliminate significant amounts of pharmaceuticals, although not enough
for the food and beverage industry requiring high purity water. Pharmaceuticals are formulated to function
at low levels like parts per billion or parts per trillion, much lower than the current water treatment detection
limit parts per million. The constant presence of low levels of pharmaceuticals in water is harmful to aquatic
life as well as humans. Fish and amphibians living downstream from wastewater treatment plants have been
found to exhibit both female and male sex organs. The constant presence of background antibiotic reduces
the effectiveness of antibiotics. Many new technologies are being developed to treat pharmaceuticals more
cost-effectively.
www.europac.ca 33
Major Industrial Water Use

Canadian manufacturing industries used 2806.2M3 metres of water in 2009. Paper industries accounted
for 41.9% of water withdrawal, followed by primary metals at 27.7% and chemical industries at 8.8%. The
food industries took in 8.7% of water followed by 7.9% in petroleum and coal industries. Over half of the
water intake was from the Great Lakes-St. Lawrence basin, followed by the Pacific Coastal basin and the
Fraser-Lower Mainland basin. About three-quarters of industrial water use is self-supplied surface freshwa-
ter from lakes and rivers.
Figure 32. Water Intake in Manufacturing

Source: Statistics Canada, 2009
Pulp and Paper

Headline news of water usage and water pollution from the oil and gas industry have taken attention away
from the largest industrial user of water, the pulp and paper industry. The pulp and paper industry uses
five times more water than the petroleum and coal industry in Canada. About 20-80L of water is required
to produce 1kg of paper. The effluent from pulp and paper production is highly toxic and contains a large
amount of organic solids. The cost of fresh water supply and wastewater treatment represents about 10%
of production costs. The Canadian pulp and paper have invested billions of dollars in technology that reduc-
es its air emission and effluent pollution. Most pulp and paper mills are equipped with on-site primary and
secondary water treatment plants to treat water before re-use and discharge. Compared to the relatively
new processes used in oil sands recovery and hydraulic fracturing, the pulp and paper industry has a longer
history of dealing with adverse impacts and has better established regulatory requirements.
Oil and Gas

In an oil and gas reserve formation, the oil and gas layer floats on top of the water layer (formation water).
During the extraction process, a large amount of water is produced. This water is called “produced” water.
Produced water can be as salty as sea water or five times as salty. In addition to being salty, it is also mixed
with hydrocarbons and dissolved gases. Produced water can be treated then re-injected back to the reser-
voir to enhance oil recovery. It can be disposed at an approved disposal well (Figure 33) or treated before
it is discharged back to its environment. Disposal wells are located below groundwater supply to minimize
the risk of ground water contamination.
About 50% of Alberta’s oil production is water-assisted which equals $450M per year in royalties (Golder
Associates). The life of maturing conventional oil wells is being extended by technology like enhanced oil
recovery. A large volume of water is injected to enhance the recovery of oil from wells. About 20% more
water is required to meet the demand of new wells coming online by 2030. Sources of water used in oil
34 www.europac.ca
and gas extraction can come from the sea if the asset is offshore or near the coast. Water can also come
from produced water, aquifer or drinking water from municipalities. Using water from drinking water supply
is often met with protest from local residents.
Hydraulic Fracturing
The controversy around hydraulic fracturing or “fracking” for unconventional gas development appears in
the news on a regular basis. Fracking is a relatively new technique compared to conventional extraction
techniques. Water is injected into geological formation so that the pressure within the formation cracks
open the rock formation (coal or shale) to release natural gas. Fracking water is laced with hundreds of
chemicals additives. Flowback fracking water can be treated and reused for further fracking. When the
fluid becomes too contaminated to reuse, it can be trucked
to a licensed waste treatment facility or injected into an ap-
proved disposal well. In British Columbia, surface discharge
of oil and gas wastewater is not allowed but it is still being
practiced in other parts of the world. Regulatory framework
is being developed to address the needs for local citizens
and the environment.
Fracking and drilling water treatment is a relatively small

market at $1.2B per year where wastewater and stormwa-
ter treatment is five times as large at $7B per year. However,
fracking and drilling fluids are often more contaminated than
wastewater and storm water. So the challenge to come up
with cost-effective remediation solutions remains. Disposal
well is the least expensive way to deal with produced water.
However, once the water is injected into the disposal well,
that water is lost forever. Such method of disposal has no
benefits. Water scarcity, concerns over disposal well failures
(seepage or earthquake) and the decreasing cost of water
treatment are factors that are pushing industries towards
recycling water. So the water stays available and can benefit
some user, even if it is fish in the river. This is the difference
between “beneficial”’ uses and “non-beneficial” disposal. Figure 33. Schematic Diagram of a Water Disposal Well
Source: BC Oil and Gas Commission
Water Risk – How Shell Canada is

Managing to Stay in Business Despite Water Shortages
Just like interest rate risk and other types of risks, business and industries need to consider “Water Risk”
in order to ensure both the short and long-term viability of their business. An example of how industry is
mitigating water risk is the Shell Canada-funded reclaimed sewage water facility in the City of Dawson
Creek, British Columbia, the first of its kind in Canada. Northeast British Columba is experiencing the driest
months since 1942. The petroleum industry has been using 1M gallons a day of Dawson Creek’s drinking
water but drinking water was no longer available in time of drought. Moreover, industry has been banned
from taking water from surrounding rivers and streams. River water levels have been so low that certain gas
drilling projects are at risk of being shut down. Many years ago, Shell Canada offered to fund a $14M water
www.europac.ca 35
treatment plant for the City of Dawson Creek in exchange for a secure supply of water for the next 10 years.
Dawson Creek’s municipal sewage is treated at the treatment plant and treated water is piped back to Shell
Canada’s Groundbirch natural gas operation 50km away. This “recycled″ water has allowed Shell Canada to
mitigate its water risk by not relying on freshwater or drinking water. Water recycling is a lower cost alterna-
tive than the expensive method of trucking in water from Alberta. Shell Canada’s Groundbirch operation
is a unique example of how industry has come up with a creative solution that shields their business from
water risk by incorporating sustainable water use in their business planning. The underlying message is
that industries need to think ahead of the curve and undertake preventative measures to ensure both the
immediate and long-term viability of their operations.
Mining
Mining Activities Constrained by Water Scarcity
Water is often pumped out to keep underground mines from filling with water. The industrial scale
dewatering operation causes a large quantity of water loss from evaporation, which is groundwater
that becomes unavailable for alternate use. In southern Arizona, Rosemont copper plans to build an
open-pit copper mine. The mine plans to recycle most of the water used in mining operations and em-
ploy “dry-stack” tailings where 85% water in the tailing is squeezed out and recycled. Despite having
water-conservation measures in the proposed mine plan, local residents feel that in arid South Arizona,
the most important resource is water, not copper, and have strongly opposed the opening of the mine.
The production of potash and phosphate fertilizers, uranium, crushed sand and gravel aggregate,
salt, dimension stone, gypsum, and more recently diamonds, have water requirements. Operations
at several potash mines located in the semi-arid parts of the Canadian prairies have been limited by
water availability. In the case of diamond mining in Lac de Gras, Northwest Territories, dewatering
can result in the extraction of deep saline water. Despite the seemingly plentiful surface water in
Northwest Territories, much of the terrain is classified as semi-arid. Limited water availability prevents
dilution of mine effluent and results in higher treatment cost to maintain effluent concentration at
acceptable levels (Environment Canada).
Turning Acid Mine Drainage and Tailings into an Asset

The mining industry is known more for the environmental degradation of water than the use of water.
Acid mine drainage (AMD) describes the release of acidic water from abandoned mine sites. Mining opens
up rock surfaces and over time metals in the rock such as pyrite or chalcopyrite oxidize and leaches into
water running through mine sites. High concentrations of sulphate, ferrous ions, copper, nickel or cadmium
can be found in the water passing through mines, tailings or waste rock piles. AMD is known for its longev-
ity, and sometimes persists for hundreds of years. In North America, AMD and metal leaching have caused
significant ecological damage, contaminated rivers, loss of aquatic life and multi-million dollar clean-up
costs for industry and government. Once water is contaminated, its economic and ecological value is lost
for decades. In Canada, the total liability from acid rock drainage is estimated to be between $2B and $5B.
With $17.5M invested, Canada’s AMD liability has been reduced by $400M over eight years (Natural Re-
source Canada). Prevention or “source control” of AMD is not easily achievable because it is difficult to seal
the mine or tailings to prevent oxygen from entering the mine or tailings pile. Since it is difficult to inhibit the
formation of AMD, “migration control” of AMD is widely used. Migration control treats AMD by channelling
acidic mine drainage water into ponds and neutralizes its acidity by adding lime and removing precipitated
36 www.europac.ca
metals. Treated water then can be discharged. Biological methods can also be employed where bac-
teria neutralizes AMD and immobilize metals. With the high prices of gold and other metals, it can
be feasible to turn AMD and AMD-generating tailings from a liability into an asset. Iron oxide sludge
recovered from a drainage channel has been used in manufacturing pigment. Bactech Environmen-
tal’s (CNS:BAC) biological remediation of AMD-generating tailings and at the same time recover pre-
cious metal for sale, providing financial return on the investment. BioteQ Environmental Technologies
(TSX:BQE) creates customized water treatment solutions to remove or recover dissolved metals and
remove sulphate from water generated by mining, power generation, and oil and gas.
Mine Water and Wasterwater Sector Expected to Grow

The global mining wastewater treatment market reported a
revenue of US$2.29B in 2011. It is estimated the revenue
growth will reach $3.60B in 2016 (Frost & Sullivan). A unique
challenge to the mining sector is that it must rely on the lo-
cation of the ores and adapt to the host environment of the
proposed mine. The mining industry needs to meet increasing
world demand of metals yet it also needs to find a sustainable
source of water as well as meet tighter environmental regula-
tions. Solutions for water quantity and quality issues associ-
ated with mineral extraction are essential for long-term water Figure 34. Acid Mine Drainage from the Sherridon
management. Mine in Northern Alberta
Activity Intake Recycle* Gross Water Use Discharge Consumption**

Mineral Extraction
Metal Mines 427.8 260 1542 573.6 NA
Non-Metal Mines 56.3 72 97 72.4 NA
Coal Mines 34.2 124 77 25.9 NA
Precipitation decreases in subtropical land regions Very likely to occur
Decreased water resources in many semi-arid areas, including west-
High confidence
ern U.S. and Mediterranean basin
Mineral Manufacturing
Primary Metals 1423.0 1447.9 2870.9 1303.0 120.0
Non-Metallic Mineral Products 102.3 91.8 194.1 83.1 19.2
Petroleum and Coal Products 370.5 541.4 911.9 348.0 22.5
Figure 35. Survey of Water Use in the Mineral Extraction and Associated Manufacturing Industries (million cubic metres water/year),
1996 (Environment Canada, 2002)
* Recycle rate = recycle as a % of intake.
** No reliable mining water consumption values can be estimated due to a high level of discrepancies between intake and discharge,
probably due to unaccounted for tailings pond losses to evaporation and subsurface seepage.
www.europac.ca 37
Food and Beverage Industry

The food and beverage industry is an intensive water user by the nature of its products. The Food and
Beverage industry requires ultrapure water in the manufacturing process. Traces of antibiotics and
pharmaceuticals have been found to pass through the public water treatment facilities. Such water
needs to be treated to eliminate hormones and pharmaceuticals before it becomes an ingredient in
food and beverage products. Wastewater from food and beverage processing typically has high bio-
chemical oxygen demand (BOD), chemical oxygen demand (COD), totals fats/oils/greases (FOG) and
total suspended solids (TSS). Municipal water treatment plants charge premium for the treatment
of high BOD/COD/TSS/FOG water. Technologies that reduce consumption of water and effectively
produce ultrapure input water and treat high organic content effluent will lower operating costs for
food and beverage companies.
Leading the way is beverage giant, Coca-Cola. The Coca-Cola Company launched a trial “zero dis-
charge” program in China. In 2011, Coca-Cola China recycled 16.4% of the water it used in produc-
tion. The amount of water recycled is equivalent to a monthly supply of water for 300,000 house-
holds. In the same year, Coca-Cola also launched a sustainable agriculture program in China’s major
sugar cane producing area to ensure a sustainable supply of cane sugar for its soft drinks production.
Figure 36. Amount of Water Required to Produce Common Beverages

Source: The Cleantech Group, Lenntech, Water Footprint Network
Textile Industry
Thirsty Cotton
Cotton is widely used as the versatile natural fibre in apparel. However it is an extremely thirsty crop
and was responsible for the disappearance of the Aral Sea in Central Asia. The Aral Sea was once the
world’s fourth-largest lake; now, 50 years later, it is only 10% of its size. It is considered one of the most
shocking environmental disasters. The disaster was the result of a Soviet diversion project in which wa-
ter was pumped out of the sea to irrigate cotton in the region. Now the region can no longer support cot-
ton production and collapsed with it is the local fishing economy. Cotton also requires heavy pesticides
and fertilizer input. Excess pesticides and fertilizers surface runoff enter into river as contaminants.
38 www.europac.ca
Hanesbrands Inc. and Levi Strauss & Co., leading clothing companies, have started to look for sustain-
able fibre alternatives. Both companies are developing sustainable fibre made out of flax with Naturally
Advanced Technologies (TSXV:NAT). Naturally Advanced has an enzyme that breaks-down rough flax
fibre to achieve the softness and performance superior to cotton. Utilizing sustainable fibre either as
an alternative or supplement to cotton fiber will allow the textile industry and cotton farmers to avert
environmental and economic disaster like the Aral Sea (Figure 37).
Levis Strauss has also announced Water<Less Jeans in 2010. Water consumption is cut down by an
average of 28% in the production of these jeans as its campaign to reduce the environmental impact
of its products.
Figure 37. Disappearance of the Aral Sea between 1989 and 2008 from Cotton Cultivation
Source: NASA
Industrial water treatment Investment opportunities in the categories below often overlap with investment
opportunities in municipal water treatment. This is because most water treatment technology companies
have products that serve both municipal plants as well as industrial customers. Companies in this space
like SEAIR Diffusion Systems (TSXV:SDS), ENPAR Technologies (TSXV:ENP), GLV (TSX:GLV) and H2O Innova-
tion (TSXV:HEO) have technologies that can be applied in both municipal and industrial settings.
1. Production of Potable Water for Worker Camps: Many technologies (ceramic filters, membrane
filters) are being developed for filtering raw water for workers at remote worker camps. Offshore
oil and gas platforms require desalination systems to render seawater drinkable.
2. Pre-treatment of Mine Water: Mobile filtration system can be used to filter raw water to reduce
metal contents in water. Pre-treatment of raw water reduces fouling and maintenance costs in
mining operations.
3. Process Water Treatment: Treatment of industrial process water for recycling or regulation-
compliant discharge.
4. Produced Water Treatment and Recycling: Technologies have been developed to remove sus-
pended solids, heavy metals, cyanide, dissolved gases and chemicals from produced water,
enabling water recycling. Aqua-Pure Venture (TSXV:AQE) specializes in the treatment and recy-
cling of hydraulic fracturing water in shale gas operations. In the same line is Ridgeline Energy
www.europac.ca 39
Services (TSXV:RLE), originally an environmental consulting company, now provides produced

water and flowback water treatment for the shale gas operations.
5. Ultra-Purification Waster Systems: Ultrapure water is required for the food and beverage, com-
puter chips manufacturing and pharmaceutical industries.
6. Bio-Energy Plant: Bio-energy plants transform high organic content in wastewater from food
and beverage industry into biogas, a type of waste-to-energy production.
7. Metals Recovery from Wastewater: Technologies allow metals recovery from leach solutions,
electroplating baths and extraction fluids.
Desalination
Desalination is widely used to provide drinking water and irrigation water in arid countries like Saudi
Arabia, United Arab Emirates, Kuwait, Israel and Australia. Desalination is a process where seawater
(or brine water) is separated from its salt and mineral content. There are two methods of desalination:
thermal vacuum distillation and reverse osmosis (a type of membrane filtration). In vacuum distilla-
tion, pressurized water is evaporated by heating. Reverse osmosis forces water to go through mem-
branes leaving highly salty water behind. Since the 1980s, reverse osmosis has taken over thermal
distillation as the more cost-effective method of desalination. Desalination is very energy-intensive
and expensive. However, decreasing cost of membranes has reduced the price of desalination from
over $1.50 per cubic metre in the 1980s to around $0.75-$0.50 per cubic metre in 2010 (Figure
38). At the same time, increasing municipal water costs have started to make desalination more
economic in supplementing populations in California and Hong Kong. According to the International
Desalination Association, 14,451 desalination plants operated worldwide in 2009, producing 60M
m3 per day, a year-on-year increase of 12.3%. The total volume of water produced from desalination is
expected to reach 120M m3 by 2020 with 40M m3 planned in the Middle East. The largest desalina-
tion plant in the world is the Jebel Ali plant in the United Arab Emirates.
Sales of reverse osmosis systems and related components were $2.6B in 2009, an increase
from $1.9B in 2005. Sales are projected to be worth $3.5B by 2014, at 7.3% CAGR over five
years. (BCC Research)
Figure 38. Cost of Desalination: Sea Water Reverse Osmosis (SWRO) Cost Trend Figure 39. Cost Breakdown of a Typical Reverse-Osmosis Desalination Plant
Source: Water Use Association “Seawater Desalination Costs”, 2012. Source: Pacific Institute
*Municipal Water Cost for San Diego, Monterey, Perth, Sydney and Barcelona.
40 www.europac.ca
Figure 39. Cost Breakdown of a Typical Reverse-Osmosis Desalination Plant

Source: Pacific Institute
Besides providing water for municipalities, desalination is also used in industrial applications such
as brine treatment of produced water in oil and gas extraction. Desalination produces freshwater and
concentrated hot brine. Disposal of hot brine directly into the ocean can cause thermal pollution and
adverse change in water salinity for aquatic life. Hot brine can be discharged with municipal waste-
water to dilute heat and salt content if municipal wastewater is available.
Desalination Not a Magic Bullet – The Water and Energy Nexus

In oil-rich but water-poor countries in the Middle East, large quantities of fossil fuels are used to
generate electricity which runs the desalination plants. In other parts of the world, such surplus of
fossil fuel does not exist. In California, where many desalination plants are planned, rising cost of
energy has made the desalination plant in the town of Marina unfeasible.
In each litre of potable water, energy was used for pumping, treatment and transport. Powering
pumps, treatment plants, hot water heaters and boilers were found to represent 12% of Ontario’s
total demand for electricity and 40% of the natural gas demand, which is comparable to other
major industrial sectors in the Ontario economy. “Water Services” can be viewed as a stand-alone
energy sector (Ontario Water Conservation Alliance).
Producing water from recycling waste and gray water requires far less energy than treating salt wa-
ter using desalination systems. Desalination is not the magic bullet that will lead to water freedom.
Water conservation practices, water restriction and other water supply options remain the superior
alternative to desalination.
www.europac.ca 41
Figure 41. Water and Energy Nexus

Source: Caption from “Water Resources” US Global Change Research Program and Image from “Energy Demand on
Water Resources” U.S. Department of Energy, 2005 (pg.13)
Water and energy are intimately connected. Water is used by the power generation sector for cooling,
and energy is used by the water sector for pumping, drinking water treatment, and wastewater treat-
ment. Without energy, there would be limited water distribution, and without water, there would be
limited energy production.
1. Desalination Technologies: Investment in desalination technologies can overlap with invest-
ment in industrial and municipal water treatment technologies because membrane technologies
are used in all three categories. Typically membranes are continuously improved to increase
efficiency and prevent clogging.
2. Cogeneration: Building Power Plants with Desalination Plants: Solar rays are concentrated
to boil seawater called concentrated solar. Steam converted from boiling water is used to turn
power generators and the same steam can be collected as desalinized water. Tidal or wave
energy plants can also be built with desalination plants. Both methods of desalination have
no carbon footprints. Such large projects are often undertaken by multinational conglomerates
such as General Electric and Veolia Environment.
42 www.europac.ca
Water Use in Transport

Transport by water is the cheapest and most efficient means of moving bulky commodities and large
quantities of goods. Low water levels in lakes and rivers around the world are causing problems in
the transportation of goods and negatively impacting the shipping industries.
In the winter of 2011, when the Danube River in Eastern Europe was experiencing low water levels
from a prolonged period of drought, grain traders had to switch to more expensive methods of
transportation including exporting by road and rail. The low water level simply could not support
the weight of barges and ships. In the U.S., the low water level in portions of the Mississippi River
this year disrupted the flow barges carrying coal to power plants. The U.S. Army Corps of Engineers
dredged the river to deepen the navigation channel. Low water levels in Lake Superior and Lake
Michigan-Huron (the two lakes are connected hydrologically-speaking) this year also prevented
shipment of commodities and adversely affected shipping businesses.
Besides dredging of sediments and gravel from waterways, there is not much that can be done to
defy the laws of physics. Changing water levels are expected to alter transportation patterns and
costs around the world.
Investing in Water in Canada

Canada regards water as a public resource that should remain under government control.
Therefore there are no publically-traded water utility companies in Canada in which investors can
invest. The water market is dominated by multi-national conglomerates like General Electric (GE
Water), Siemens, Pall and Veolia Environment, with their efforts in building desalination plants and
providing water services. Where opportunities lie in Canada is in its innovative water technologies.
Canadian water technology success stories like Trojan Technologies and ZENON Environmental,
both commercialized their technologies around the world, have inspired a plethora of water
innovations in Canada.
The tearsheets accompanying this report showcase the diversity of emerging pure-play water
technology companies along with a couple of larger companies that have significant business
segments in water-related products or services. Other smaller water technologies companies
include Enpar Technologies (ENP.TSX-V), E.S.I. Environmental Sensors (ESV.TSX-V), Seprotech
Systems (SET.TSX-V), Semcan (STT.TSX-V) and Thermal Energy International (TMG.TSX-V). Capstone
Infrastructure (CSE.TSX) is a power infrastructure company that also holds a 50% interest in a
water utility in Bristol, U.K., Algonquin Power and Utilities (AQN.TSX) has a water utilities business,
Liberty Utilities, in the US. The water division of Liberty Utilities has 21 water distribution and
wastewater operations.
Private water technology companies like Epcore Energy, Kontek Ecology Systems, Ostara Nutrient
Recovery Technologies, Imbrium Systems, Saltworks Technologies, Xogen Technologies and
www.europac.ca 43
Newterra have innovative solutions ranging from “zero-discharge” of water in oil and gas operations
to decentralized water treatment for municipal markets. Many of these companies have won awards
and some are considered high profile companies among venture capitalists.
The Great Lakes have attracted industries to set up operations around their perimeters. The cluster
of industrial activities has led to water pollution and the accompanying legislations that forces
companies to clean up their wastewater. The need to address water pollution around the Great
Lakes has presented the ideal opportunity and environment to create new inventions. More water-
related patents have been issued in Ontario over the past 30 years than in any other comparable
jurisdiction in the world. This makes Canadian water technology companies worth watching.
44 www.europac.ca
Aqua Pure Ventures Inc. (AQE.V) BioteQ Environmental Technologies Inc. (BQE)
Market Data (as of OCT 9, 2012 | $M) Market Data (as of OCT 9, 2012 | $M)
Share Price $0.18 Share Price $0.16
Market Cap $16.47 Market Cap $10.80
Net Debt $12.96 Net Debt -$8.64
Cash & Short Term Investments $0.14 Cash & Short Term Investments $8.64
Debt $13.10 Debt $0.00
Enterprise Value $29.43 Enterprise Value $2.16
Basic S/O (M) 91.50 Basic S/O (M) 69.97
Fully Diluted (M) 98.44 Fully Diluted (M) 69.97
Avg Daily Volume (3mo, k) 19 Avg Daily Volume (3mo, k) 106
52 Week Range $0.1 - $0.29 52 Week Range $0.13 - $0.35
KEY FINANCIAL METRICS KEY FINANCIAL METRICS

$M (Except per share data) 2011A $M (Except per share data) 2011A
Revenue $5.81 Revenue $7.41
EPS -$0.11 EPS -$0.07
Company Description Company Description

Industrial Water Treatment Industrial Water Treatment
Aqua-Pure Ventures engages in the research, BioteQ Environmental Technologies is an industrial
development, and application of remediation and recycling process water technology company focusing on the
technology for contaminated waters in Canada and the mining industry in North America, Chile and China. It
United States. The company focuses unconventional treats water contaminated with dissolved heavy metals,
energy plays like shale gas/shale oil. Aqua-Pure is active sulphate and produces saleable by-products and clean
in the Barnett Shale and the Eagle Ford Shale. Its ROVER water that can be discharged safely. The company has
clarifier technology recycles flowback water from hydraulic also commercialized Sulf-IX and Sulf-IXC ion exchange
fracturing. Its NOMAD evaporator recovers distilled water technologies to treat water with low metal concentrations.
from wastewater. The company was founded in 1992 and The company was founded in 1998 and is headquartered
is headquartered in Calgary, Canada. in Vancouver, Canada.
SHARE PRICE/TRADING VOLUME CHART SHARE PRICE/TRADING VOLUME CHART
Source: bigcharts.com Source: bigcharts.com
www.europac.ca 45
Clearford Industries Inc. (CLI.V) GLV, Inc. (GLV)
Net Debt $2.68 Net Debt $61.94
Debt $5.50 Debt $88.30

EPS -$0.07 EPS -$1.23

Water Infrastructure Industrial Water Treatment
GLV provides technological solutions used in water
Clearford Industries is the developer of the patented
treatment, and pulp and paper production in North America,
Small Bore Sewer (SBS), a watertight small diameter
Europe, Asia, the Asia-Pacific, Africa, the Middle East, Latin
wastewater collection and treatment system for markets
America, and Russia. It operates through two segments,
in South America and Asia. The company’s “distributed”
Water Treatment (Ovivo), and Pulp and Paper. Ovivo designs
sewer treatment system aims to replace traditional gravity
and markets treatment and recycling solutions for municipal
sewer system and reduces the need for pumps. The
and industrial customers. The Pulp and Paper segment
company’s system allows localized treatment of solids
designs and markets equipment used in various stages of
and the generation of biogas for sale. Only the effluent
paper production ranging from pulp preparation to sheet
portion of sewage is transported to centralized municipal
formation and finishing. The company was founded in 1975
wastewater treatment plants to prevent plant overcapacity.
and is headquartered in Montreal, Canada.
The company is headquartered in Ottawa, Canada.
46 www.europac.ca
GWR GLOBAL WATER REsources (GWR) H2O Innovation Inc. (HEO.V)
Net Debt $0.03 Net Debt $6.12
Debt $280.00 Debt $6.70

EPS -$0.21 EPS -$0.13

Water Utilities Municipal and Industrial Water Treatment
H2O Innovation designs, produces, and installs
GWR Global Water Resources is comprised of two
customized integrated water treatment solutions targeting
divisions, water utilities and FATHOM. In the water utilities
multiple markets, including municipal, commercial and
division, the company owns and operates regulated
industrial sectors in North America. The company has a
water, wastewater and recycled water utilities largely
portfolio of membrane technologies such as Bio-Brane
in Phoenix, Arizona. FATHOM is an integrated suite of
and Bio-Wheel and bioreactor processes. The company
advanced technology-enabled services designed to bring
also sells special chemicals for its membrane technology
heightened efficiencies to municipally-owned utilities.
customers. The company founded in 2000 and is
The services offered by FATHOM provide automation,
headquartered in Quebec, Canada.
cost savings and opportunities for increased revenue for
municipally-owned utilities. The company was founded in
2003 and based in Phoenix, Arizona, USA.
www.europac.ca 47
Logistec Corp. (LGT) Naturally Advanced Technologies Inc. (NAT.V)
Debt $16.91 Debt $0.00
52 Week Range $23-$18.5 52 Week Range $1.5 - $3.59

EPS $2.69 EPS -$0.18

Water Infrastructure & Marine Transport Water Conservation
Logistec provides specialized cargo handling and other services to Naturally Advanced Technologies engages in the
a wide variety of marine, industrial and municipal customers. The development and execution of CRAiLAR and CRAiLEX
company’s subsidiary, Sanexen Environmental Services, operates in bast fiber processing technologies. The company’s
the environmental sector where it provides services for the trenchless enzyme technology allows the breakdown of flax-
structural rehabilitation of underground water mains, management based fibers to achieve the softness and performance
of PCBs, site remediation, risk assessment, and woven-hose requirements comparable or superior to cotton in apparel
manufacturing. Sanexen has developed the Aqua-Pipe® technology, manufacturing. Switching from cultivation of cotton
a process involving structural lining with minimal excavation, for the to flax will play a significant role in water conservation
rehabilitation of drinking water supply lines between 150 millimetres and prevention of water contamination in agriculture.
and 300 millimetres in diameter. Aqua-Pipe® is a technology that The company’s technology also has application in pulp
creates a new structural pipe made of composite materials within and paper. The company was founded in 1998 and is
aging pipes that have reached the end of their useful life. headquartered in British Columbia, Canada.
48 www.europac.ca
Newalta Corporation (NAL) PURE TECHNOLOGIES LTD. (PUR)
Debt $355.40 Debt $0.00
Enterprise Value $1,077.10 Enterprise Value $201.60

EPS $0.69 EPS -$0.14

Environmental Remediation Pipes Inspection & Leak Detection
Newalta provides solutions to industrial customers to Pure Technologies engages in the development and
improve their environmental performance with a focus on application of patented and proprietary technologies
recycling and recovery of products from industrial residues. for the inspection, monitoring, and management of
The company also provides waste processing services, such physical infrastructure worldwide. The company offers
as collection, consolidation, and processing of organic and SoundPrint, an acoustic monitoring technology for the
inorganic industrial wastes, such as acids, caustics, fluids, remote health monitoring of water and waste water
contaminated soil, emulsions, frac sand, fuels, interceptor pipelines, bridges, buildings, and other infrastructure
wastes, lab packs, oily water, slop oil, sludge, solids, spill components. It also provides P-Wave and Remote Field
materials, tank bottoms, waste glycol and oils, waste paints Transformer Coupling (RFTC), which are non-destructive
and solvents, and wastewater. Further, the company operates technologies that utilize electromagnetic techniques to
landfills, water disposal wells, and salt caverns for disposing monitor condition of large-diameter water and waste
non-hazardous and solid industrial wastes, wastewater, and water transmission pipelines. The company was founded
difficult waste. The company was founded in 1995 and is in 1993 and is headquartered in Calgary, Canada.
based in Calgary, Canada.
www.europac.ca 49
Ridgeline Energy Services Inc. (RLE.V) Seair Inc. (SDS.V)
Net Debt -$10.25 Net Debt $8.60
Debt $0.30 Debt $8.60

EPS -$0.03 EPS -$0.06

Municipal and Industrial Water Treatment Industrial Water Treatment
Ridgeline Energy Services Inc., an environmental Seair’s primary focus is developing and selling equipment
technology and consulting company, provides water that diffuses gases such as Oxygen, Ozone and/or CO2
and soil waste management services in the oil into water. The diffusion technology allows water and
and gas industry in North America. The company’s wastewater treatment results that are not possible with
electrocatalytic process makes water reject conventional gas-based systems. The company also
contaminates which makes it easier to recycle and owns and operates a fleet of rental portable wastewater
re-use water. The company started its business as treatment units primarily for performing sewage treatment
an environmental consulting company. Recently it at remote campsites in Alberta, Canada. The company
changed its focus and is now focused on growing its offers its systems for use in various industries comprising
water treatment business as it believes the water waste/ water treatment, pulp and paper, aquaculture,
segment is at the start of a significant growth cycle. agriculture/ horticulture, sterilization, golf course
The company is headquartered in Calgary, Canada. irrigation and pond treatment, animal enhancement, and
oil and gas industries. The company was founded in 1998
and is headquartered in Edmonton, Canada.
50 www.europac.ca
Euro Pacific Canada Inc. Research Disclosures
Analyst Certification
I, Sabrina Tsai, hereby certify that the views expressed in this report accurately reflect our personal views about the subject securities or issuers. We also certify that we have not, am not,
and will not receive, directly or indirectly, compensation in exchange for expressing the specific recommendations or views in this report.
Stock Rating Categories
BUY: The security represents attractive relative value and is expected to appreciate significantly from the current price over the next 12 month time horizon.
SPECULATIVE BUY: The security is considered a BUY but in the analyst’s opinion possesses certain operational and/or financial risks that are higher than average.
HOLD: The security represents fair value and no material appreciation is expected over the next 12-18 month time horizon.
REDUCE: The security is expected to depreciate in the near term; however the long term outlook is positive.
SELL: The security represents poor value and is expected to depreciate over the next 12 month time horizon.
Ratings Distribution
Euro Pacific Canada’s initial rating distribution is as follows (rating distribution is updated monthly):
Recommendation Hierarchy BUY SPECULATIVE BUY HOLD REDUCE SELL UNDER

REVIEW
Percentage of total recommendations 12% 35% 6% - - 47%
Number of recommendations 2 6 1 - - 8
Percentage of investment banking relationships 50% 33% - - - 25%
Number of investing banking relationships 1 1 - - - 2
Company Specific Disclosures

Is this an issuer related or industry related publication? Industry
1) Does the Analyst or any member of the Analyst’s household have a financial interest in the securities of the subject issuer?
If Yes: 1) Is it a long or short position? NA; and, 2) What type of security is it? NA
2) Does the Analyst or household member serve as a Director or Officer or Advisory Board Member of the issuer?
3) Does Euro Pacific Canada Inc. or the Analyst have any actual material conflicts of interest with the issuer?
4) Does Euro Pacific Canada Inc. and/or one or more entities affiliated with Euro Pacific Canada Inc. beneficially own common shares (or any other class of common
equity securities) of this issuer which constitutes more than 1% of the presently issued and outstanding shares of the issuer?
5) During the last 12 months, has Euro Pacific Canada Inc. provided financial advice to and/or, either on its own or as a syndicate member, participated in a public
offering, or private placement of securities of this issuer?
6) During the last 12 months, has Euro Pacific Canada Inc. received compensation for having provided investment banking or related services to this Issuer?
7) The analyst had an on site visit with the Issuer within the last 12 months.
8) Has the Analyst been compensated for travel expenses incurred as a result of an on site visit with the Issuer within the last 12 months?
9) Has the Analyst received any compensation from the subject company in the past 12 months?
10) Is Euro Pacific Canada Inc. a market maker in the issuer’s securities at the date of this report?
Company Name Ticker Disclosures
Aqua-Pure Ventures AQE
BioteQ Environmental Technologies BQE
Clearford Industries CLI
GWR Global Water Resources GWR
GLV GLV
H2O Innovation HEO
Logistec LGT
Naturally Advanced Technologies NAT
Newalta NAL
Pure Technologies PUR
Ridgeline Energy Services Inc. RLE
Seair Inc. SDS
U.K. Disclosures
This research report was prepared by Euro Pacific Canada Inc., a member of the Investment Industry Regulatory Organization of Canada and the Canadian Investor Protection Fund
EURO PACIFIC CANADA INC. IS NOT SUBJECT TO U.K. RULES WITH REGARD TO THE PREPARATION OF RESEARCH REPORTS AND THE INDEPENDENCE OF ANALYSTS.
The contents hereof are intended solely for the use of, and may only be issued or passed onto persons described in part VI of the Financial Services and Markets Act 2000 (Financial Promo-
tion) Order 2001. This report does not constitute an offer to sell or the solicitation of an offer to buy any of the securities discussed herein.
U.S. Disclosures
This research report was prepared by Euro Pacific Canada Inc., a member of the Investment Industry Regulatory Organization of Canada and the Canadian Investor Protection Fund.
This report does not constitute an offer to sell or the solicitation of an offer to buy any of the securities discussed herein.
Euro Pacific Canada Inc. is not registered as a broker-dealer in the United States. The firm that prepared this report may not be subject to U.S. rules regarding the preparation of research
reports and the independence of research analysts.
NOTES:
52 www.europac.ca
Institutional Sales & Trading
David Foley, Managing Director, Institutional Trading 416-933-3350
david.foley@europac.ca
Cyrus Osena, Managing Director, Institutional Sales 416-479-8987

cyrus.osena@europac.ca
Toronto Christine Young, Institutional Sales 416-479-8690
130 King Street West christine.young@europac.ca
Exchange Tower, Suite 2820
Ingrid Ridout, Institutional Sales 416-933-3351
Box 20, Toronto ON, M5X 1A9 ingrid.ridout@europac.ca
416-649-4273
888-216-9779 Tom Seniuk, Sales Trader 416-649-4273 x301
tom.seniuk@europac.ca
Montreal
1501 Mc Gill College Avenue Investment Banking
Suite 1450 David Cusson, CEO 416-649-4271
Montréal, QC H3A 3M8 david.cusson@europac.ca
Rob Furse, President 416-649-4288
Vancouver rob.furse@europac.ca
One Bentall Centre Blair Jordan 778-331-5042
505 Burrard Street, Box 76 blair.jordan@europac.ca
Vancouver BC V7X 1M4
Bryce Bradley 778-111-5048
bryce.bradley@europac.ca
Christina McCarthy, Mining Specialist 416-649-4273 x405
christina.mccarthy@europac.ca
Research
www.europac.ca
Luisa Moreno, PhD, MEng., Analyst 416-933-3352
luisa.moreno@europac.ca
Sabrina Tsai, Analyst 416-479-8976
sabrina.tsai@europac.ca
DESIGN & LAYOUT

Ted Thompson 647-688-1554
ted.thompson@europac.ca
Water
HOW MUCH WOULD YOU PAY FOR AN OUNCE OF BLUE GOLD?
■ How thirsty cities, farms, power utilities and resource companies can find more water
■ Water prices rising faster than electricity
■ Managing “Water Risk” to stay in business and outperform
■ Canada, a breeding ground for world-class water technology companies
www.europac.ca

Europac Work Sample

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Europac Work Sample

Uploaded by

Copyright:

Available Formats

October 10, 2012

THE EURO PACIFIC ADVANTAGE Toronto

As a full-service broker/dealer, we are constantly expanding our offerings to allow

Infrastructure Replacement and Expansion

Aqua Pure Ventures 45 Bioteq Environmental Technologies Inc. 45

Water: How Much Is There?

Figure 1. Available Water

Figure 2. The Hydrological Cycle

Cross Country Comparison

Figure 3. Water Uses for Main Income Groups of Countries

Figure 4. Global Water Withdrawal and Consumption, 2002

Figure 5. Average Daily Water Use Per Capita

Figure 6. Map of Blue Gold – Global Relative Water Scarcity

Global Macro Trend – Water and Climate Change

Figure 7. Global Temperature Difference

Adapt to Climate Change to Avoid Costly Natural Disasters

Figure 8. The Palmer Drought Severity Index (PDSI)

Phenomena Likelihood of trend

Figure 9. Global Climate Change: Future Trends

A Canadian Perspective - Water Usage by Sector

Canada’s Water Yield Declining

Relative to the rest of the world, Canada is a water-rich

Agricultural Water Use

Agriculture-intensive provinces like Ontario,

Water Shortage Drives Up

Ethanol: Water for Food or Fuel?

Figure 14. Corn Usage by Segment, 2010

Urban Development Competes with Agriculture for Water

Increasing Salinity in Estuaries Contaminates

Farm Runoff Pollutes Waterways

Drinking Water Pollution

of groundwater in the Fraser Valley

Investment Opportunities in Agriculture

Industrial Water Use

Water Use in Energy

Figure 19. Water Use in Gas and Liquid Fuel Production

Figure 17. Impact of Power Generation on Water Quantity and Quality

Figure 18. Projected Water Consumption for Thermoelectric Power Plants

Water Consumption in Fuel Production - Cars Won’t Run Without Water

Raw Materials Litres Per GJ Transformation Litres Per GJ Total L Per GJ

Figure 19. Water Use in Gas and Liquid Fuel Production

Warm Seawater Shut Down Nuclear Power Plant

Future Power Generation Constrained by Water Availability and Quality

Investment Opportunities in Energy

2. Combined-Cycle Gas Turbines: The natural-gas-fired combined-cycle turbine uses

4. Wind and Solar Photovoltaic: The obvious choice in water conservation

DOMESTIC WATER USE

“God Gave Us Free Water.

Water is Not Free - Canada’s 31 Billion

The Mystery of Water Pricing

Water Prices Growing Faster than Electricity Prices

The average Canadian daily domestic use of fresh water

Canadian cities are among the heaviest water users with

Figure 23b. Toronto Utilities Consumer Price Index

Figure 25a. World Municipal Water Prices

Water Rights – Water Trading

Centuries Old Power Struggle Over Water Rights

Water Privatization Controversy

Global Water and Wastewater Treatment Market

One Person’s Waste, Another Person’s Gold -

Drinking Water Treatment Processes

2. Coagulation and Flocculation (Particle aggregation): Flocculants and coagulates such as

Figure 27. Typical Drinking Water Treatment Flow Chart