Thirsty China Attracts Investment Flow in Water
China’s demand for clean water is projected to rise to 585 billion cubic metres per day by 2010. That is equivalent to 1,000 times the daily volume of water approaching Niagara Falls’ during peak flow season.
Amongst BRIC developing countries, India’s and China’s water resources are very much below what will be needed to support their populations adequately.
Growing water scarcity and greater willingness by China’s central and local governments to utilize market-based mechanisms to resolve the problem are likely to lead to more opportunities for private water companies with compelling value propositions. Demand-based solutions that better manage demand and improve resource efficiency such as recycling and reclamation technologies or multi-tier pricing will be in vogue. Supply-based solutions, such as desalinization or reallocation schemes (e.g. South-to-North Water Diversion) will also continue apace.
This is good news for Chinese water treatment firms such as China Everbright, China Water Affairs Group, Guangdong Investment, Beijing Capital Company and Tianjin Capital Environmental Protection Company, as well as foreign firms such as Véolia Water, Suez and Berlin Water, as they collaborate with municipalities in building or upgrading water treatment facilities. Smaller foreign water specialists like Hyflux, IDE and Bio-treat Technology also see ample opportunity in the China market and are already offering their water/wastewater treatment services and technologies to both municipalities and industrial parks.
Companies providing financial services however, are likely to find the most opportunities in this sector providing project financing for facility upgrades or construction. Other opportunities could take the form of equity investments in new listings of privatized Chinese water utilities and in specialized water mutual funds.
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