Summary
The Covid-19 pandemic has brought much uncertainty to society and the global economy. During the recent turmoil, the importance of having access to water, supported by well-functioning infrastructure, was highlighted. While many difficulties are still being faced in this area, potential opportunities have also arisen.
Key takeways
- Today, water treatment systems are generally effective in killing a wide range of bacteria and viruses. However, the least developed countries often do not have access to such systems, making them more vulnerable to diseases and pandemics.
- Water quality and water treatment solutions are among the highest priority expenditures for both water utilities and governments worldwide.
- To be prepared for future pandemics, we need to reassess our contingency preparedness plans and the resilience of our current infrastructure.
- The resilience of water infrastructure has never been more important and the social value of water has never been greater.
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Although Covid-19 cannot spread through the water and sewage systems, other important factors needed to be considered during the pandemic. For example, water utilities had to ensure consistent water supply and sewage operations, despite the distancing measures and the health risks for the employees, as well as restricted supply chains.
The water industry now needs to consider the resilience of this essential service in the light of future risks. In addition, investors must assess the short, medium and long-term implications of the pandemic on businesses. Understanding these impacts will help to unveil attractive opportunities and future winners.
Water quality: treatment focus
While SARS-CoV-2, better known as Covid-19, spreads through air-droplets, the World Health Organization has confirmed that it has not been detected in water sources1. Furthermore, the virus has been characterised as unstable, making it susceptible to traditional disinfectant chemicals such as chlorine.
Today, water treatment systems are generally effective in killing a wide range of known, and unknown, bacteria and viruses (including a wide range of coronaviruses). The pathogens that fall under the umbrella encompass those of specific significance and proved risk of spread through water.
Most viruses and bacteria can be killed with a handful of common water treatment methods, including various chemicals and/or UV light treatment.1 Usually, utilities would opt for a combination of both, as different bacteria can survive different sanitation measures. Despite the resilience of some virus families to common disinfection technologies, these measures are generally accepted to be adequate for the provision of safe drinking water, creating no significant health hazards.
Ultimately, countries with a better developed water infrastructure have greater success at preventing these types of outbreaks, as they have the required technology to kill most known water-born and sewer-born bacteria and viruses.
The developed world has worked to establish effective standards and treatment when it comes to water quality. For example, US regulation requires 99.99% of viruses to be removed from the water, utilising several treatment technologies.
In emerging markets, often with poor infrastructure, the situation can be quite different. This is not necessarily due to weaker standards on pathogen regulation, but due to lower sewage infrastructure penetration or poorly enforced standards. For example, only 50% of Brazil’s population is connected to a wastewater system.2
25% of the global population is exposed to contaminated or poorly treated water.3 This insufficiently treated water, in turn, is responsible for 90% of worldwide diarrheal deaths.4
Key facts on water and waste management globally
used safely managed drinking-water services
have no
water service
have no waste management service
have no
sanitation service
Water supply: resilience of infrastructure
Water treatment is not the sole solution to creating a safe supply of potable water. As the world remains isolated at home waiting for the virus to be contained, utilities are working around the clock to ensure seamless continuation of water supply while simultaneously ensuring the safety of their employees.
Now more than ever, this is a testament to the global importance of water utilities. To be prepared for future pandemics, we must reassess our emergency preparation plans as well as the resilience of our current infrastructure. This pandemic has prompted additional sanitation measures to take place to ensure that, unlike with the SARs epidemic, this virus will not be transmitted through water. Utilities have already started working on new water technology to ensure the adequate treatment and detection of any contaminant as well as ensuring the resiliency of this finite resource.
Greater sanitation
There has been much innovation of late to reduce the spread of viruses. Recently, there was a proposal for pretreating wastewater in highly susceptible and dense areas, such as hospitals, before wastewater re-enters the pipes.6 This would eliminate a significant portion of contamination risk resulting from wastewater. The proposal should also include increased sanitation services at the most highly contaminated sites with professional and effective disinfection agents. Sanitation service companies have seen an increased demand for their sanitation services through the pandemic. They have helped numerous clients such as hospitals and other institutions ensure the safety of their staff and continuity of essential services.
Quality monitoring
Another important aspect of water safety is quality monitoring. We have seen a growth in this field as water utilities and governments seek to identify contaminants before they significantly harm the source. However, water testing needs to be scaled for greater precision and detection of microbial contents. Firms that specialise in water quality monitoring help this goal by ensuring comprehensive water testing while also helping to impose additional sanitation measures.
Automation
Lastly, water services and workers within the water infrastructure industry are essential. It is estimated that half of US water utility firms prepared adequately for the pandemic, for example, working to create on-site living quarters to ensure continuity of water to citizens without increasing the risk of workers infection.7 One leader within the industry is a water utility in the Midwest of the USA, which kept several workers across three water treatment facilities living on-premise to ensure water supply to over half a million people.8
While most of the utilities worldwide managed to sustain their operations, relying on their dedicated workforce and a level of automation sufficient to run the infrastructure with minimal human contact, these systems are not yet fully optimised. Utilities have already started to plan for increased automation including better distance management, invoicing, and meter readings to name a few. A large European based utility firm has already discussed increased digitalisation targeting better wastewater management and water optimisation. As a result, water technology firms have seen a growing demand for their IT solutions.
Outlook
Covid-19 has and will continue to cause significant hardship for the global economy. Water related investments are not fully immune, as the financing of many essential infrastructure investments is now under increased scrutiny. What remains clear, however, is the number of incremental measures required at the water infrastructure level that will support continued targeted spending. Resilience of water infrastructure has never been more important, and the social value of water has never been this high. As a result of this pandemic, many utilities have had first-hand experience of testing their emergency and business continuity plans. There remain numerous opportunities for improvement and automation within this field and as a result, there will be an acceleration of spending on water related technologies.
As the world starts to reopen and we evaluate the ‘new normal’, water technology and smart water solutions will become even more essential for ensuring adequate clean water. The societal need for these investments remains, which will result in continued demand despite the uncertain economic future we face.
Allianz Global Water
The Allianz Global Water strategy is a global equity strategy that invests in companies providing products and services which actively address the water scarcity and quality issues facing the global population today, and help to improve the long-term sustainability of global water resources. The strategy focuses on three key factors: water efficiency, water quality and water supply, with the aim of delivering environmental, social and financial alpha.
Population growth and rising living standards, particularly in emerging markets, have resulted in increased demand for water. Food demand grows with population, and changes in diet have favoured protein rich foods with a higher water footprint. Industrialisation and digitisation further intensify demand through the water cost of energy generation.
However, the necessary investments in water infrastructure and technology are still yet to be made, with the structural imbalance between water supply and demand continuing to grow. This ensures that water investment is now at the forefront of the global agenda, making it a particularly attractive investment theme.
Endnotes:
1 https://www.aquatechtrade.com/news/article/coronavirus-and-water-wastewater-global-advice/
2
https://static.btgpactual.com/media/brut170308-waterprivatization.pdf
3
https://www.who.int/topics/water/en/
4 https://journals.plos.org/plospathogens/article?id=10.1371/journal.ppat.1004867
5
https://www.who.int/news-room/fact-sheets/detail/drinking-water#:~:text=Contaminated%20water%20can%20transmit%20diseases,living%20in%20water-stressed%20areas
6 https://www.sciencedaily.com/releases/2020/04/200403132347.htm
7 https://www.epa.gov/newsreleases/epa-urges-states-support-drinking-water-andwastewater-operations-during-covid-19
8
https://www.iowapublicradio.org/post/utilities-aim-keep-specially-trained-employees-healthy-and-working#stream/0
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